New Mexico Tax Changes July 2025: Impact on Your Business
Starting July 1, 2025, New Mexico businesses will face significant tax changes affecting cannabis excise taxes, gross receipts taxes, and worker’s compensation fees that could substantially impact their bottom line. From cannabis tax hikes to higher worker’s compensation fees, these changes require immediate attention and strategic planning.
Let’s break down each change and what it means for your business operations.
Cannabis Tax Increase: 12% to 13% Starting July 1
Since the initiation of adult-use cannabis sales in New Mexico in April 2022, a 12% cannabis excise tax has been in place. The original legislation provides for a gradual tax increase, starting with a 1% annual rise beginning July 1, 2025. For a dispensary generating $50,000 monthly in sales, this 1% increase translates to an additional $500 per month—$6,000 annually.
This schedule will continue annually until the rate peaks at 18% in July 2030. These planned increases aim to align with the state’s broader fiscal policies and support community initiatives. While cannabis businesses face predictable annual increases, other businesses may be surprised by location-specific changes to gross receipts taxes.
Gross Receipts Tax Rate Changes by Location
Adjustments to gross receipts and compensating tax rates are forthcoming in certain regions across the state due to actions from local governments and tribal authorities. Areas experiencing gross receipts tax rate increases include Roswell, Maxwell, Texico, Las Cruces, Santa Clara Pueblo and Land Grant, Elida, and Portales, with new location codes in Bernalillo and Dona Ana Counties. Taxpayers can refer to the state’s gross receipts and compensating tax location code map to understand the specific rates and boundaries applicable to their locality.
Beyond these location-based tax adjustments, all New Mexico businesses will encounter increased operational costs through higher state fees and surcharges.
Worker’s Compensation and State Fee Increases
Senate Bill 535 has prompted changes in several state fees and surcharges effective July 1. A notable alteration is the adjustment in the worker’s compensation fee, which will rise from $2.30 to $2.55 for employers and from $2 to $2.25 for employees. A business with 25 employees will see monthly costs increase by $6.25 for employer fees alone.
Future increases are planned for 2028 and 2033. Additionally, the 911 emergency surcharge will increase from $0.51 to $1, funding vital emergency dispatch operations. The telecommunications relay surcharge increase from 0.33% to 1.36% will affect all businesses with phone services, supporting the 988 mental health crisis lifeline.
Staying Informed About Tax Changes
For a comprehensive view of these changes and details on the 2025 legislative updates, stakeholders are encouraged to explore the state’s YouTube channel and sign up for notifications through the New Mexico Taxation and Revenue Department‘s Notification Service.
With multiple simultaneous changes affecting different aspects of business operations, many companies are finding it challenging to assess the cumulative impact on their bottom lines.
What This Means for Your Business
With less than 30 days until implementation, businesses should review their cash flow projections, update budgets, and assess whether these changes trigger any compliance obligations in other states.
How to Prepare for New Mexico Tax Changes
—Don’t let tax changes catch you off guard.
Immediate Actions:
- Cannabis businesses: Assess cash flow impact and plan for ongoing annual increases through 2030
- Multi-location operations: Determine if rate changes in Roswell, Las Cruces, or other affected areas impact your locations
- All businesses: Review whether these cost increases affect your multistate tax planning
Ready to get started? Our State and Local Tax advisors are standing by to help you navigate these changes strategically. Contact REDW’s SALT team for a consultation to:
- Calculate your specific tax impact
- Identify potential planning opportunities
- Ensure compliance across all locations
REDW’s State and Local Tax team specializes in New Mexico’s complex tax environment, helping businesses navigate everything from tribal taxation to multistate nexus issues. Our proactive approach means we don’t just help you comply—we identify opportunities to optimize your overall tax strategy and minimize unexpected costs.
Visit redw.com/salt to learn more about our services.
Jeanna Schenk, CPA, MST, is a Senior Manager in REDW’s State and Local Tax practice, specializing in multistate compliance and New Mexico tax issues.
Frequently Asked Questions About New Mexico Tax Changes
July 1, 2025
From 12% to 13%, with annual 1% increases until reaching 18% in 2030.
Roswell, Maxwell, Texico, Las Cruces, Santa Clara Pueblo and Land Grant, Elida, and Portales, with new location codes in Bernalillo and Dona Ana Counties.
