LLC vs S corp in New Mexico: which costs less (2026)

At $100,000 profit in New Mexico, a single-member LLC costs $25,588 a year in tax and fees and an LLC taxed as an S corp costs $20,698. An LLC taxed as an S corp starts to cost less from about $50,000 of profit.

$4,890 a year

saved by switching from a single-member LLC to an LLC taxed as an S corp in New Mexico, at these numbers.

Switching from a single-member LLC to an LLC taxed as an S corp starts to pay at about $50,000 of profit, with the same settings. As an LLC taxed as an S corp this uses the state's pass-through entity tax election, which lowers the cost here.

New Mexico, 2026: $100,000 profit, single filer

Item	LLC	LLC as S corp	Change
Self-employment taxirs.gov, 2026 rates	$14,130	$0	−$14,130
Federal income taxirs.gov, 2026 rates	$8,235	$9,029	+$794
State income tax, after the PTET creditrealfile.tax.newmexico.gov, checked Oct 20, 2026	$3,223	$82	−$3,141
Payroll tax on your salaryirs.gov, 2026 rates	$0	$6,510	+$6,510
Payroll service and tax return (estimate)	$0	$1,800	+$1,800
New Mexico corporate franchise taxtax.newmexico.gov, checked Oct 20, 2026	$0	$50	+$50
New Mexico pass-through entity tax, paid by the company (elected)tax.newmexico.gov, checked Oct 20, 2026	$0	$3,227	+$3,227
Yearly cost	$25,588	$20,698	−$4,890

What these figures count

State income tax, and state taxes on the business itself: franchise, LLC, S corp, gross receipts and excise taxes.
Social Security and Medicare on both sides of an owner salary, federal unemployment tax and the state's new-employer rate.
The 20% qualified business income deduction with its income limits and the professional-service rule.
Yearly report fees, and a cost you can change for payroll and the business tax return.

Many S corp calculators leave out state taxes and the QBI deduction, which can make the election look better than it is.

Yearly cost at each profit level

Profit	LLC	LLC as S corp	Difference
$30,000	$5,464	$6,971	+$1,507
$50,000	$10,763	$10,592	−$171
$75,000	$17,605	$14,252	−$3,353
$100,000	$25,588	$20,698	−$4,890
$150,000	$43,107	$35,264	−$7,843
$200,000	$61,207	$50,644	−$10,563
$300,000	$105,321	$84,348	−$20,973

Federal and New Mexico tax and fees, single filer, revenue 1.5 times profit, default salary for S and C corps. "Difference" is LLC taxed as an S corp minus Single-member LLC.

What the switch takes in New Mexico

Check the business can elect: no more than 100 shareholders, all of them US citizens or residents (no nonresident alien owners), and one class of stock. IRS
File IRS Form 2553 to elect S corp tax treatment, within 2 months and 15 days of the start of the tax year it should apply to. See how the S corp election works.
Register with New Mexico as an employer and run payroll for your own salary: federal Forms 941 each quarter, Form 940 and a W-2 each year. New employers pay New Mexico unemployment tax at 1% on the first $34,800 of wages. oui.doleta.gov See what payroll costs.
Federal return each year: Form 1120-S, due March 15, plus your own Form 1040.
State upkeep each year: no yearly report fee, due no report required. New for you: New Mexico corporate franchise tax.

What changes between the two

A plain LLC pays self-employment tax of 15.3% on 92.35% of all profit, up to the Social Security wage base of $184,500. Taxed as an S corp, the business pays you a salary, and only the salary carries Social Security and Medicare tax. The rest comes out as a distribution.

The election adds costs: a payroll service, a separate business tax return (Form 1120-S), federal and New Mexico unemployment tax on the salary, and New Mexico corporate franchise tax. The calculator counts $1,800 a year for payroll and the return. The IRS expects a reasonable salary for the work, so it cannot be set near zero.

Questions

At what profit does an S corp election pay in New Mexico?

About $50,000 a year, on the default salary (40% of profit, at least $30,000 where profit allows) and $1,800 of yearly payroll and return costs. Change the salary in the calculator to see how the point moves.

How much does it save at $100,000 in New Mexico?

$4,890 a year: Single-member LLC $25,588, LLC taxed as an S corp $20,698.

Does New Mexico recognise the S corp election?

Yes. No separate state form is needed.

More for New Mexico

Common cases in New Mexico

Other states