New Mexico Income Tax Calculator

Taxes in New Mexico

New Mexico State Tax Quick Facts

• Income tax: 1.7% - 5.9%
• Sales tax: 4.875% - 8.9375%
• Property tax: 0.80% average effective rate
• Gas tax: 17.00 cents per gallon of regular gasoline, 21.00 cents per gallon of diesel

Taxpayers in the Land of Enchantment pay three primary forms of state and local taxes: a state income tax, local property taxes and state and local gross receipts taxes. New Mexico ranks below the national average for each of these taxes.

Of course, the impact of these taxes varies depending on the financial circumstance of each taxpayer. Below we will take a closer look at the rules and exceptions for each of these taxes individually, as well as a few others such as the gas and cigarette taxes.

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New Mexico Income Taxes

New Mexico’s income tax system is modeled after the federal income tax, though it has fewer income tax brackets and significantly lower rates. As shown in the table below, there are four income brackets, with higher tax rates applying to higher earnings.

Rules for filing taxes in New Mexico are very similar to the federal tax rules. Deductions, both itemized and standard, match the federal deductions. For tax year 2023, that means single filers can claim a standard deduction of $13,850 and joint filers can claim a standard deduction of $27,700. State and local taxes are not deductible in New Mexico, so any filers claiming that itemized deduction on their federal tax return must add it back to their state taxable income.

Deduction amounts for personal exemptions are suspended for tax years 2018 through 2025 by the 2017 federal Tax Cuts and Jobs Act. In addition to that federal exemption, low- and middle-income earners may claim a $2,500 exemption for each federal exemption claimed. For single filers, anyone earning $36,667 or less may claim this exemption. For married persons filing separately, the cutoff is $27,500. For married persons filing jointly or heads of household, the cutoff is $55,000.

Using those rules for exemptions and deductions, New Mexico taxpayers can determine their taxable income and calculate their New Mexico income tax based on the rates above. After an initial tax amount is determined, there are certain rebates and credits that can be claimed to reduce the amount of taxes owed.

The available rebates and credits include the low-income comprehensive tax rebate (available to earners making less than $36,000 per year), the child day care credit, the refundable medical care credit (for taxpayers age 65 or older), the special needs adopted child tax credit and the working families tax credit.

New Mexico Capital Gains Tax

While capital gains are taxable as personal income in New Mexico, the state allows taxpayers with income from capital gains to claim a special tax deduction. That deduction is equal to up to 40% of the total income from net capital gains or $1,000 of the net capital gains reported, whichever is larger.

New Mexico Sales Tax

New Mexico doesn’t technically have a sales tax. Businesses are charged a gross receipts tax, which is collected at the state, county and city levels. This is often passed on to consumers by either adding it to the price or explicitly spelling it out on the invoice. The statewide gross receipts tax rate is 4.875%, while city and county taxes can add up to a total of 8.9375%. The table below shows state, county and city rates in every county in New Mexico.

The gross receipts tax applies to goods and services, with some exceptions. The most significant is the exemption for food. Food that is intended for immediate consumption (e.g. food ordered at a restaurant) is not exempt, however. Prescription drugs are also exempt from gross receipts taxes in New Mexico.

New Mexico Property Tax

Property taxes in New Mexico go to support local governments and schools. The state’s average effective property tax rate (annual tax payments as a percentage of home value) is 0.58%, which is the 12th-lowest rate in the country. If you are thinking about buying a property in New Mexico or refinancing a mortgage, take a look at our New Mexico mortgage guide. It has everything you need to know about New Mexico’s mortgage rates and other mortgage-related details.

New Mexico Cigarette Tax

New Mexico’s cigarette tax stands at $2.00 per pack. That’s about average for cigarette taxes in the U.S. In addition to the cigarette tax, New Mexico also imposes the Tobacco Products Tax, which applies to the manufacture or purchase of other types of tobacco products. It is equal to 25% of the value of any tobacco product.

New Mexico Alcohol Tax

Excise taxes on alcohol in New Mexico vary depending on the type of beverage being sold. Hard liquor (vodka, whiskey, etc.) is taxed at a rate of $6.06 per gallon. Beer is taxed at a rate of 41 cents per gallon, or about 3.8 cents per 12 ounce beer. Wine is taxed at a rate of $1.70 per gallon.

New Mexico Estate Tax

New Mexico’s estate tax has been phased out as of Jan. 1, 2005. There is no estate or inheritance tax in New Mexico.

• The Very Large Array in Socorro County consists of 27 separate radio antennae, each of which weighs more than 200 tons.
• Truth or Consequences, New Mexico is named after a game show from the 1950s.
• Los Alamos, New Mexico has the highest concentration of millionaires of any city in the U.S. More than 10% of households in Los Alamos have a net worth of at least $1 million.