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Gross Receipts Taxes (GRT)

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In accordance with New Mexico’s commitment to creating a universal, affordable, and high-quality early care and education system, Gov. Lujan Grisham signed HB 252 changing the state tax code allowing providers to deduct their receipts from Child Care Assistance (CCA) contracts or NM PreK grants from taxable gross receipts. This means that if you claim the deduction, you will not have to pay gross receipts tax (GRT) on these receipts (although the receipts still need to be reported). The Early Childhood Education and Care Department (ECECD) updated its CCA regulations (NMAC 8.9.3) to align with this legislative change

These changes go into effect July 1, 2024.

What does this mean for Child Care and PreK Providers?

If you currently have Tax-Exempt Status: 

  • This change will not affect you. No further action will be required on your part. 

If you do not have Tax-Exempt Status: 

  • Beginning July 1, 2024, your business will be eligible for the new GRT deduction on CCA payments and NM PreK revenues.  
  • Due to this deduction, providers can claim the GRT deduction for families on CCA and will not be permitted to charge families GRT. NM PreK providers will need to claim this exemption through the same process instead of including that rate in their invoices to ECECD.  
  • Child care providers can claim the GRT deduction monthly through the New Mexico Tax and Revenue Department (NMTRD) website through the same process currently used to file monthly GRT reports. 
  • Instructions on how to claim this deduction are available in this tutorial video on the NMTRD YouTube channel: Reporting Locations and Claiming Deductions for Gross Receipts Tax. We recommend you watch the entire video, but the relevant information on how to claim the deduction begins at time mark 5:20 in the linked video. 
  • The code you will use to claim this deduction is D0-029 for CCA providers and D0-030 for PreK providers. A helpful GRT Filer’s Kit provided by NMTRD can be found here.  
What does this mean for Families Receiving Child Care Assistance?

ECECD has changed its regulations to ensure that child care is cost free for all families receiving Child Care Assistance. 

  • What is changing? Previously, some families receiving Child Care Assistance were charged gross receipts tax (GRT) on their contracts. Effective July 1, 2024, child care providers are no longer allowed to charge families GRT on their Child Care Assistance benefit.   
  • Why is this changing? As part of her ongoing commitment to creating a universal, affordable, and high-quality early care and education system for families, Gov. Michelle Lujan Grisham signed HB 252, which changed the tax code to exempt Child Care Assistance payments from GRT. This will reduce the financial burden for families participating in the Child Care Assistance program.  
  • What does this mean for you? If you have previously paid GRT on your Child Care Assistance benefit, this cost is eliminated effective July 1, 2024. If you haven’t been charged GRT in the past, you won’t see any change. Your child care will continue to be cost free. 
  • Does this impact my Child Care Assistance Contract? No, these changes do not impact your Child Care Assistance contract, and no action is required by you. 

Questions?

If you have questions about filing this deduction or other taxes, please contact NMTRD at 1-866-285-2996 or consult your accountant. NMTRD call center information, field office locations, and an inquiry form can be found at tax.newmexico.gov/send-us-a-message/.