For life sciences and startup companies, New Mexico’s gross receipts tax (GRT) can create exposure beyond traditional product sales. Its tax base is broader than a typical state sales tax, generally covering receipts from property and services, including certain out-of-state services whose resulting product is initially used in New Mexico. Businesses without a physical presence may also need to file and pay GRT after exceeding $100,000 of taxable New Mexico gross receipts in the preceding calendar year.
Evaluating exposure requires more than a look at location or profitability. Research and development, clinical coordination, testing, licensing, milestone arrangements and grant-funded projects can have different GRT consequences depending on the underlying rights, obligations and deliverables. A payment labeled a grant is not automatically nontaxable. Services generally remain taxable unless an exemption or deduction applies.
Favorable treatment may be available, but qualifications matter. New Mexico distinguishes exempt receipts from receipts that must still be reported and deducted, even when no tax is due. Certain prescription products, medical equipment and laboratory receipts may qualify for targeted deductions, while other transactions remain taxable. Supporting documentation is important to sustaining these positions.
An early review of revenue streams and reporting practices can help reduce unexpected liabilities and make audits, financing and acquisitions easier to manage. For emerging companies, addressing GRT before a major transaction can also help protect margins and avoid discovering exposure during due diligence.
If your company conducts business in New Mexico or receives payments from customers in the state, contact Withum’s State and Local Tax (SALT) Team. We can help assess your GRT exposure, evaluate potential exemptions and deductions and identify the reporting considerations relevant to your business.
For more information on this topic, please contact a member of our team.
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