Sales tax holidays give shoppers a chance to save when they buy certain products or from certain retailers. Many states offer tax holidays at specific times of year to help give businesses and consumers a boost. While November is typically a big month for sales and shopping, it’s not a big month for sales tax holidays. Just one state, New Mexico, has a tax holiday in November.
What’s a Sales Tax Holiday?
On sales tax holidays, retailers can’t collect sales tax when customers purchase qualifying items. Examples of popular sales tax holidays include back-to-school, disaster prep, and energy-saving appliances.
Sales tax holidays can make life a little bit trickier for retailers, as they need to know what items are included in the holiday and whether it extends to local sales tax or is just for state taxes.
New Mexico Sales Tax Holiday
Small Business Saturday comes the day after Black Friday. It’s meant to be a day for celebrating and supporting mom-and-pop businesses. Retailers often offer sales and specials on Small Business Saturday to encourage people to shop.
New Mexico sweetens the deal by turning Small Business Saturday into a sales tax holiday. Retailers who qualify can deduct the gross receipts tax (New Mexico’s version of sales tax) from sales of qualifying personal property, which must be priced under $500.
True to its name, the Small Business Saturday tax holiday is open to small businesses only. To qualify, a company must have fewer than 10 employees throughout the year. It also must have its primary business in New Mexico.
This year’s Small Business Saturday tax holiday takes place on November 25.
What Does It Mean for You?
If your company is based in New Mexico and has less than 10 employees, then you may need to deduct sales tax from any purchases made on November 25. This isn’t a place where you need to worry about having physical or economic nexus—the holiday is only open to companies that have New Mexico as their primary business location.
To claim the sales tax holiday deduction, you need to include the appropriate deduction code when you file your sales tax return in New Mexico.