New Mexico is one of the most affordable states in the West, with a cost of living about 7% below the national average and median home prices well under $300,000 in most cities. The economy is concentrated in government (federal labs, military bases), healthcare, and energy. Albuquerque is the largest city and primary job center, while Santa Fe and Los Alamos are financial outliers — Santa Fe for its art/tourism economy and high housing costs, Los Alamos for some of the highest per-capita incomes in the country. The state has a progressive income tax (up to 5.9%) and uses a gross receipts tax instead of a traditional sales tax. New Mexico is especially attractive to retirees: Social Security is not taxed below $100,000 AGI, and the state offers generous retirement income exemptions.
New Mexico at a Glance
| Metric | Value | National Rank |
|---|---|---|
| Population (2024) | 2.1 million | 36th |
| Median household income | $56,169 | 2nd lowest |
| Median home price | $310,000 | Below average |
| Cost of living index | 90 | Below average |
| State income tax | 1.7-5.9% | Average |
| Sales tax (gross receipts tax) | 5.0% (+ local up to 4%) | High combined |
| Property tax (effective rate) | 0.67% | Very low |
Income and Housing
| City/Area | Median Income | Median Home Price | Median Rent (2BR) |
|---|---|---|---|
| Albuquerque | $58,000 | $320,000 | $1,150 |
| Santa Fe | $68,000 | $560,000 | $1,500 |
| Las Cruces | $46,000 | $250,000 | $950 |
| Rio Rancho | $65,000 | $310,000 | $1,200 |
| Los Alamos | $118,000 | $450,000 | $1,600 |
| Roswell | $45,000 | $180,000 | $800 |
Los Alamos is an outlier — home to Los Alamos National Laboratory, it has the 2nd highest per capita income of any US county.
Santa Fe is also an outlier — an arts/tourism/government hub with home prices well above state average.
Tax Note: Gross Receipts Tax
New Mexico doesn’t have a traditional sales tax. Its “gross receipts tax” (GRT) is similar but applies to businesses, and most pass it to consumers. Rates vary:
| Location | Effective GRT Rate |
|---|---|
| Albuquerque | 7.88% |
| Santa Fe | 8.44% |
| Las Cruces | 8.31% |
New Mexico Pros and Cons
| Financial Pros | Financial Cons |
|---|---|
| 10% below national COL | 2nd lowest median income |
| Very low property taxes (0.67%) | Limited job market |
| Social Security not taxed | High poverty rate |
| National labs offer high-paying jobs | High gross receipts tax in cities |
| Affordable outside Santa Fe | Santa Fe housing is expensive |
Related: Cost of Living by State | State Income Tax Rates | Property Tax by State