New Mexico has progressive income tax rates from 1.7% to 5.9% — with generous Social Security exemptions and various rebate programs.
New Mexico Income Tax Rates for 2026
Single Filers
| Taxable Income | Tax Rate |
|---|---|
| $0 - $5,500 | 1.7% |
| $5,500 - $11,000 | 3.2% |
| $11,000 - $16,000 | 4.7% |
| $16,000 - $210,000 | 4.9% |
| Over $210,000 | 5.9% |
Married Filing Jointly
| Taxable Income | Tax Rate |
|---|---|
| $0 - $8,000 | 1.7% |
| $8,000 - $16,000 | 3.2% |
| $16,000 - $24,000 | 4.7% |
| $24,000 - $315,000 | 4.9% |
| Over $315,000 | 5.9% |
New Mexico Tax Calculator Examples
Example 1: $75,000 Single Filer
| Component | Calculation |
|---|---|
| Tax on first $5,500 (1.7%) | $94 |
| Tax on $5,500-$11,000 (3.2%) | $176 |
| Tax on $11,000-$16,000 (4.7%) | $235 |
| Tax on $16,000-$75,000 (4.9%) | $2,891 |
| Total New Mexico tax | $3,396 |
| Effective rate | 4.53% |
Example 2: $150,000 Married Filing Jointly
| Component | Calculation |
|---|---|
| Tax on first $8,000 (1.7%) | $136 |
| Tax on $8,000-$16,000 (3.2%) | $256 |
| Tax on $16,000-$24,000 (4.7%) | $376 |
| Tax on $24,000-$150,000 (4.9%) | $6,174 |
| Total New Mexico tax | $6,942 |
| Effective rate | 4.63% |
New Mexico Deductions
Standard vs. Itemized
New Mexico uses federal adjusted gross income as a starting point, with modifications. Taxpayers can:
- Use the federal standard deduction calculation
- Or itemize deductions
Personal Exemptions
| Exemption Type | Amount |
|---|---|
| Personal exemption | $4,000 |
| Dependent | $4,000 |
| 65+ | Additional credits |
| Blind | Additional credits |
New Mexico Retirement Income
Social Security Exemption
| Filing Status | AGI Threshold | SS Tax Treatment |
|---|---|---|
| Single | Under $100,000 | Fully exempt |
| Married | Under $150,000 | Fully exempt |
| Above thresholds | Partial to full taxation | Gradual phase-in |
Other Retirement Income
| Income Type | Tax Treatment |
|---|---|
| Federal pensions | Partially exempt ($8,000) |
| State/local pensions | Partially exempt ($8,000) |
| Military retirement | Partially exempt |
| Private pensions | Taxable |
| 401(k)/IRA | Taxable |
New Mexico offers an $8,000 exemption for certain pension income.
What Income is Taxed in New Mexico?
Taxed:
- Wages and salaries
- Self-employment income
- Interest and dividends
- Capital gains (taxed as ordinary income)
- Retirement income (above exemptions)
- Rental income
Not taxed or fully exempt:
- Social Security (under income thresholds)
- First $8,000 of qualifying pensions
- New Mexico municipal bond interest
New Mexico vs. Neighboring States
| State | Top Income Tax Rate |
|---|---|
| Texas | 0% (no income tax) |
| Arizona | 2.5% (flat) |
| Colorado | 4.4% (flat) |
| Oklahoma | 4.75% |
| New Mexico | 5.9% |
| Utah | 4.55% (flat) |
New Mexico has the highest top rate among its neighbors.
New Mexico Rebates and Credits
Working Families Tax Credit
| Federal EITC | NM Credit |
|---|---|
| Based on federal EITC | Percentage of federal |
| Refundable | Yes |
Low Income Comprehensive Tax Rebate
Available to lower-income taxpayers to offset regressive taxes.
Child Tax Credit
| Children | Credit Amount |
|---|---|
| Per qualifying child | Up to $175 |
| Income limits apply | Yes |
Filing New Mexico State Taxes
| Filing Requirement | Details |
|---|---|
| Form | PIT-1 |
| Due date | April 15 |
| E-file | Yes, through Taxpayer Access Point |
| Extension | Automatic 6 months with federal |
New Mexico Gross Receipts Tax
New Mexico doesn’t have traditional sales tax. Instead:
| Rate | Application |
|---|---|
| State rate | 5.0% |
| Local rates | 0.375% - 3.9375% additional |
| Total range | 5.375% - 8.9375% |
The Gross Receipts Tax is similar to sales tax but technically different.
New Mexico Property Tax
- Average effective rate: ~0.70% (below national average)
- Veteran exemptions available
- Head of household exemptions
- Favorable for homeowners
Tips to Reduce New Mexico Taxes
- Social Security strategy — Stay under $100K/$150K AGI
- Pension exemption — $8,000 excluded
- Claim all credits — Working families, child credits
- Retirement timing — Consider AGI thresholds
- Consider Arizona — Much lower rates (2.5% flat)
New Mexico Tax Authority
New Mexico Taxation and Revenue Department
- Website: tax.newmexico.gov
- Phone: 505-827-0700
- For refunds, returns, and questions
Bottom Line
New Mexico has progressive income tax from 1.7% to 5.9% — higher than neighboring states. However, Social Security is fully exempt for most taxpayers (under $100K/$150K AGI), and an $8,000 pension exclusion provides some relief. The gross receipts tax (similar to sales tax) ranges from 5.4% to 8.9%. Property taxes are below average at 0.70%. Texas (no income tax) and Arizona (2.5% flat) offer significantly lower tax burdens for those willing to relocate.
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