New Mexico vs Delaware: Side-by-Side Comparison
Here's a comprehensive comparison of the two states across all key factors for non-resident LLC formation:
| Feature | New Mexico | Delaware |
|---|---|---|
| Income Tax | 1.7%–5.9% | 2.2%–6.6% |
| Corporate Tax | 4.8%–5.9% | 8.7% |
| Sales Tax | 5.125% GRT | 0% |
| Annual Fee | $0 | $300 |
| Formation Fee | $50 | $90 |
| Privacy | Complete anonymity | No member/manager disclosure |
| Court System | Standard state courts | Court of Chancery (specialized) |
| Asset Protection | Moderate | Moderate |
| Best For | Maximum anonymity, zero-maintenance entities | Corporations, VC startups, established case law |
Tax Comparison
New Mexico Taxes
- Personal Income Tax: 1.7%–5.9%
- Corporate Tax: 4.8%–5.9%
- Sales Tax: 5.125% GRT
Delaware Taxes
- Personal Income Tax: 2.2%–6.6%
- Corporate Tax: 8.7%
- Sales Tax: 0%
For non-resident entrepreneurs with single-member LLCs treated as disregarded entities, state income tax typically only applies if you have income sourced within that state. If you have no in-state operations, employees, or customers, state income tax may not apply regardless of which state you form in.
Formation & Annual Costs
| Cost | New Mexico | Delaware |
|---|---|---|
| Formation Fee | $50 | $90 |
| Annual Fee | $0 | $300 |
| Registered Agent (est.) | $100–$300/year | $100–$300/year |
| Estimated Year 1 Total | $200 (with RA) | $540 (with RA) |
Privacy & Asset Protection
New Mexico
- Privacy: Complete anonymity
- Asset Protection: Moderate
- Court System: Standard state courts
Delaware
- Privacy: No member/manager disclosure
- Asset Protection: Moderate
- Court System: Court of Chancery (specialized)
The Verdict: New Mexico or Delaware?
New Mexico is the ultimate low-cost, low-maintenance choice: $50 to form, no annual reports, no annual fees, and complete anonymity. Delaware offers better legal protections (Court of Chancery) and more established business law, but costs $300/year. For non-resident entrepreneurs who don't need Delaware's sophisticated court system, New Mexico saves $350+/year with better privacy. Delaware is essential only for VC-backed companies or complex corporate structures.
Our Recommendation
New Mexico for cost and anonymity; Delaware for legal sophistication
Remember that regardless of which state you form your LLC in, your federal tax obligations remain the same. All foreign-owned single-member LLCs must file Form 5472 and a pro forma Form 1120 annually, with a $25,000 penalty for non-compliance.
Need Help Choosing the Right State?
Our experts can help you determine the best state for your LLC based on your specific situation, business type, and goals.
Get Expert Advice