PTE Withholding Payments Are Considered Estimated Entity-Level Tax Payments in New Mexico

  |   June 23, 2022

New Mexico issues payment guidance for optional pass-through entity (PTE) tax election. 

On March 8, 2022, New Mexico Governor Michelle Lujan Grisham signed House Bill 102 into law, allowing pass-through entities to make an optional, annual election to pay tax at the entity level for taxable years beginning on or after January 1, 2022.  

This election is made by filing a timely, complete entity-level tax return. The entity-level tax is imposed on the distributed net income of the pass-through entity.

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Recently, the state provided estimated payment guidance that withholding payments made by a pass-through entity are also considered estimated payments for the entity-level tax. —The amount and due date for making estimated payments for the entity-level tax are the same as for pass-through entity withholding payments.  

The current requirement for making withholding payments is that payments are made annually. Therefore, an entity is NOT required to make separate quarterly estimated payments for the entity-level tax. The New Mexico Tax and Revenue Department will only require an annual pass-through entity withholding payment. In other words, New Mexican taxpayers can save time and money in 2022 as they do not need to continue making separate payments in anticipation of the PTE election in 2023.  

See New Mexico Bulletin B-300.20 for more information» 

We Welcome Your Questions 

Should you consider making the New Mexico pass-through entity election? Discuss your options with REDW’s trusted State and Local Tax (SALT) advisors before making the election next year. Reach out to State and Local Tax Manager Jeanna Schenk below.