What is the New Mexico PTET rate?

New Mexico's PTET rate is 5.90% flat. Taxed at the higher of NM personal or corporate income tax rate — currently 5.9% top for both.

Is the New Mexico owner credit refundable?

New Mexico's PTET owner credit is refundable. Beginning tax year 2023, owners claim credit on personal or corporate income tax return for entity-paid tax.

Does New Mexico PTET affect composite-return filing?

Stacks. See the composite-vs-PTET page for the full matrix.

New Mexico · NM

New Mexico Pass-Through Entity Tax (PTET)

New Mexico's PTET regime is one of the 37+ state workarounds to the federal SALT cap (IRC §164(b)(6)). The election is annual, statute-pinned below, and interacts with composite filing and §199A QBI in state-specific ways.

Statute: N.M. Stat. Chapter 7, Article 3A (Pass-Through Entity Tax)
State DOR portal: https://www.tax.newmexico.gov/businesses/corporate-income-franchise-tax-overview/pass-through-entity/
Election deadline: [PLACEHOLDER: state DOR cite] — Annual election by filing the required PTE return for NM.
Election form: Form PTE (NM Information Return for Pass-Through Entities) with entity-tax election
Entity-level rate: 5.90% — Taxed at the higher of NM personal or corporate income tax rate — currently 5.9% top for both.
Eligible entities: s-corp, partnership, llc-as-s, llc-as-partnership
Owner credit: refundable — Beginning tax year 2023, owners claim credit on personal or corporate income tax return for entity-paid tax.
Composite interaction: stacks
§199A QBI base reduction: Yes — Reduces federal flow-through income (Notice 2020-75).
Last verified: 2026-05-11

Source: tax.newmexico.gov pass-through-entity page + B-300.24 bulletin. NM 5-category EXCLUSION list is the most explicit in the manifest.

IRC §164(b)(6)Notice 2020-75 IRC §199A

Reference computation

For a New Mexico pass-through entity with $500,000 of qualified net income allocated to this state, at a 37% federal marginal bracket, the entity-level PTET and federal-deduction math is:

New Mexico — reference example

QBI allocation·NM rate= Entity-level tax

$500,000×6%=$29,500

N.M. Stat. Chapter 7, Article 3A (Pass-Through Entity Tax)

Entity tax·Federal bracket= Federal deduction (gross)

$29,500×37%=$10,915

At a 37% federal bracket, the entity-level deduction saves $10,915 in federal tax. Net of §199A QBI offset (~20% × bracket × entity tax = $2,183), aggregate benefit is approximately $8,732.

IRS Notice 2020-75

Run the picker pre-filled for New Mexico

Election walkthrough

Verify eligibility. New Mexico accepts: s-corp, partnership, llc-as-s, llc-as-partnership. Excluded income: allocations/guaranteed payments to (1) US/NM/political subdivisions, (2) federally recognized Indian nations/tribes/pueblos in NM, (3) 501(c)(3) entities, (4) C corporations including the income in NM unitary return, and (5) another PTE that owns the electing PTE.
Check the deadline. [PLACEHOLDER: state DOR cite] — Annual election by filing the required PTE return for NM. Election is binding on all owners of the electing pass-through entity.
Compute the entity-level tax. Apply the 5.90% rate to qualified net income.
Pay and file. Use Form PTE (NM Information Return for Pass-Through Entities) with entity-tax election. Quarterly estimates may be required.
Owners claim the state credit. refundable credit on the personal state return.
Verify composite interaction. Composite interaction: stacks. See composite vs PTET.
Run the federal §199A QBI math. PTET reduces the QBI base proportionally; net the federal SALT-arbitrage against the §199A offset.

New Mexico PTET — common questions

Annual deadline reminder

State PTET law revises annually. New Mexico's data was last verified on 2026-05-11. Re-confirm with the state DOR primary source before electing or filing. Last full-site review: 2026-05-12.

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Reference computation

For a New Mexico pass-through entity with $500,000 of qualified net income allocated to this state, at a 37% federal marginal bracket, the entity-level PTET and federal-deduction math is:

New Mexico — reference example

QBI allocation·NM rate= Entity-level tax

$500,000×6%=$29,500

N.M. Stat. Chapter 7, Article 3A (Pass-Through Entity Tax)

Entity tax·Federal bracket= Federal deduction (gross)

$29,500×37%=$10,915

At a 37% federal bracket, the entity-level deduction saves $10,915 in federal tax. Net of §199A QBI offset (~20% × bracket × entity tax = $2,183), aggregate benefit is approximately $8,732.

IRS Notice 2020-75

Election walkthrough

Verify eligibility. New Mexico accepts: s-corp, partnership, llc-as-s, llc-as-partnership. Excluded income: allocations/guaranteed payments to (1) US/NM/political subdivisions, (2) federally recognized Indian nations/tribes/pueblos in NM, (3) 501(c)(3) entities, (4) C corporations including the income in NM unitary return, and (5) another PTE that owns the electing PTE.

Check the deadline. [PLACEHOLDER: state DOR cite] — Annual election by filing the required PTE return for NM. Election is binding on all owners of the electing pass-through entity.

Compute the entity-level tax. Apply the 5.90% rate to qualified net income.

Pay and file. Use Form PTE (NM Information Return for Pass-Through Entities) with entity-tax election. Quarterly estimates may be required.

Owners claim the state credit. refundable credit on the personal state return.

Verify composite interaction. Composite interaction: stacks. See composite vs PTET.

Run the federal §199A QBI math. PTET reduces the QBI base proportionally; net the federal SALT-arbitrage against the §199A offset.

New Mexico PTET — common questions