New Mexico sales tax holiday changes under consideration

New Mexico has provided a back-to-school tax holiday every year since 2005. Its 2025 tax holiday could be longer and apply to more goods.

Often called a sales tax holiday, the New Mexico back-to-school tax-free holiday is in fact a gross receipts tax holiday because New Mexico has a gross receipts tax instead of a sales tax. During the tax-free weekend, the state suspends the collection of gross receipts tax for qualifying items. Many merchants absorb the tax on certain nonqualifying items as well.

Changing tax-free weekend dates

Currently, the New Mexico sales tax holiday takes place for three days the first Friday through Sunday in August. It will run August 1–3, 2025, if nothing changes this year.

Senate Bill 76 moves the start of the summer tax-free holiday forward, stretching it out. If this tax holiday legislation becomes law, the New Mexico sales tax holiday will begin at 12:01 a.m. on the last Friday in July and end at midnight the following Sunday. The 2025 New Mexico sales tax holiday would start July 25, run for nine days, and conclude August 3.

Higher price thresholds

SB 76 would also increase the price thresholds, meaning there would be more items eligible for the New Mexico tax-free holiday. The price caps would increase as follows:

• From $100 to $150 for the following items:
  • Backpacks, book bags, globes, and maps
  • Clothing, footwear, and accessories
• From $1,000 to $1,500 for computers (e.g., desktops, laptops, notebooks)
• From $500 to $750 for computer accessories (e.g., keyboards, monitors, speakers)

The tax holiday legislation doesn’t appear to change the price threshold for school supplies, which is currently $30.

If enacted, SB 76 would take effect June 20, 2025 — in time to affect the 2025 sales tax holiday. And depending on the Legislature’s timeline, businesses may not have much time to prepare.

An August 2024 survey of 500 operations and/or finance professionals at small and midsize U.S. retailers highlights how difficult complying with sales tax holidays can be for retailers. For example, 32% of survey respondents described sales tax holidays as a “logistical nightmare,” 58% spend at least $10,000 annually preparing for tax-free events, and 73% reported difficulties in complying with sudden sales tax holiday changes.

Compliance is less burdensome for businesses that automate sales tax calculation, collection, and remittance. Learn more about automating sales tax compliance.

See a list of states with 2025 sales tax holidays.