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.
For a side-by-side comparison of every state’s income tax rates, see state income tax rates by state 2026 and best and worst states for taxes 2026. Federal income tax applies on top of state taxes — see 2026 federal income tax brackets to calculate your combined liability.
The content on Wealthvieu is for informational purposes only and should not be considered financial, tax, or investment advice. Consult a qualified professional before making financial decisions. Full disclaimer · Editorial policy