New Mexico Sales Tax Exemptions / Tax Free Items New Mexico: Sales Tax Handbook

New Mexico:

What purchases are exempt from the New Mexico sales tax?

While the New Mexico sales tax of 5.125% applies to most transactions, there are certain items that may be exempt from taxation. This page discusses various sales tax exemptions in New Mexico.

Sales Tax Exemptions in New Mexico

In New Mexico, certain items may be exempt from the sales tax to all consumers, not just tax-exempt purchasers.

Many states have special, lowered sales tax rates for certain types of staple goods - such as groceries, clothing and medicines. Restaurant meals may also have a special sales tax rate. Here are the special category rates for New Mexico:


Clothing

  5.125%

Groceries

  EXEMPT

Prepared Food

  5.125%

Prescription Drugs

  5.125%

OTC Drugs

  5.125%

These categories may have some further qualifications before the special rate applies, such as a price cap on clothing items. Groceries are generally defined as "unprepared food", while pre-prepared food may be subject to the restaurant food tax rate.

Candy and soda may be included or excluded from any preferential tax rate depending on whether or not the state considers them to be a "grocery":


Is candy taxable in New Mexico? Candy IS considered a grocery in New Mexico
Is soda taxable in New Mexico? Soda IS considered a grocery in New Mexico

Are services, shipping, installation, etc taxable in New Mexico?

The taxability of transactions involving services, shipping, and installation of tangible goods can be slightly complicated with various laws applying to slightly different situations. To learn more about how these transactions, and other more complicated situations, are subject to the New Mexico sales tax see the New Mexico sales taxability FAQ page.


Other tax-exempt items in New Mexico

This table lists a number of additional categories of goods and services that are exempt from New Mexico's sales tax. For a list that also shows taxable items, see the list of taxable and nontaxable items in New Mexico.

Category Exemption Status
Amazon Purchases
Products on Amazon.com EXEMPT
Food and Meals
Grocery Food EXEMPT
Manufacturing and Machinery
Raw Materials EXEMPT
Newspapers and Magazines
Newspapers EXEMPT
Occasional Sales
General Occasional Sales EXEMPT *
Motor Vehicles EXEMPT *
Optional Maintenance Contracts
Parts Purchased for Use in Performing Service Under Optional Maintenance Contracts EXEMPT
Pollution Control Equipment
General Pollution Control Equipment EXEMPT
Trade-Ins
General Trade-Ins EXEMPT *

* See notes in category taxability page for details



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Source: http://www.salestaxhandbook.com/new-mexico/sales-tax-exemptions