New Mexico Income Tax Calculator
Tax Breakdown
New Mexico Tax Overview
New Mexico Income Tax Brackets 2026
New Mexico employs a graduated income tax with four brackets. The rates range from 1.7% on the lowest income to 5.9% on taxable income exceeding $210,000 for single filers or $315,000 for married filing jointly. New Mexico recently reformed its income tax structure by adding a higher bracket for top earners, replacing the previous top rate of 4.9% that applied to a much lower threshold. This change increased progressivity and generated additional revenue while reducing the burden on moderate-income taxpayers.
New Mexico uses federal adjusted gross income as the starting point for state tax calculations. The state conforms to the federal standard deduction ($15,000 single / $30,000 married filing jointly), and also provides additional deductions for specific categories of income, including a low-income comprehensive tax rebate, medical care expense deductions, and various credits for working families.
| Taxable Income (Single) | Rate | Taxable Income (MFJ) | Rate |
|---|---|---|---|
| $0 – $5,500 | 1.70% | $0 – $8,000 | 1.70% |
| $5,500 – $11,000 | 3.20% | $8,000 – $16,000 | 3.20% |
| $11,000 – $210,000 | 4.70% | $16,000 – $315,000 | 4.70% |
| Over $210,000 | 5.90% | Over $315,000 | 5.90% |
New Mexico Gross Receipts Tax (GRT)
New Mexico does not have a conventional sales tax. Instead, the state imposes a Gross Receipts Tax (GRT) on businesses based on their gross receipts from selling property, performing services, and leasing property in New Mexico. The state GRT rate is 5.0%, and local governments (counties and municipalities) add their own increments, bringing the combined rate to between 5.0% and over 9% depending on location.
The key distinction between GRT and a traditional sales tax is that GRT is technically a tax on the business, not the consumer. Businesses are taxed on their total gross receipts, and they may choose to pass this cost to consumers, but it is not a separately stated tax at the point of sale in the way sales tax typically is. However, most businesses do pass the GRT on to customers, and many receipts show the GRT as a separate line item. The GRT also applies to many services that would not be taxable under a traditional sales tax, including professional services, construction, and real estate transactions.
Groceries (unprepared food) were historically subject to GRT in New Mexico, but the state recently enacted legislation to exempt food from the state-level GRT. Local GRT components may still apply to food purchases in some jurisdictions. Prescription medications are exempt from GRT.
Notable Combined GRT Rates
- Albuquerque (Bernalillo County) — approximately 7.875%
- Santa Fe — approximately 8.4375%
- Las Cruces — approximately 8.3125%
- Rio Rancho — approximately 7.4375%
- Roswell — approximately 7.5625%
New Mexico Property Tax
New Mexico's effective property tax rate is approximately 0.67%, which is well below the national average. The state constitution limits the total property tax rate, and residential property is assessed at one-third of its market value. Additionally, the value of existing residential property for tax purposes cannot increase by more than 3% per year, regardless of actual market appreciation. This provides significant protection for long-term homeowners in rapidly appreciating areas like Santa Fe.
New Mexico offers a generous Head of Family exemption of $2,000 off the assessed value and a veteran exemption of $4,000 for qualified veterans. Disabled veterans may qualify for complete property tax exemption. The state also provides a property tax rebate for low-income residents through its income tax system, and seniors may qualify for a valuation freeze that prevents the assessed value of their home from increasing.
New Mexico Retirement Tax Benefits
New Mexico has become increasingly attractive for retirees. Social Security benefits are fully exempt from state income tax for taxpayers with AGI below $100,000 (single) or $150,000 (married filing jointly). For those 65 and older, an additional deduction of up to $8,000 per person is available for other retirement income, including pensions, 401(k) distributions, and IRA withdrawals. The low property tax rate and moderate cost of living add to New Mexico's appeal for retirees.
New Mexico vs. Neighboring States
New Mexico's tax profile is moderate compared to its neighbors:
- Arizona — 2.5% flat income tax, 8.37% avg sales tax, 0.51% property tax. Arizona's lower flat income tax rate may be more attractive for higher earners, though GRT and sales tax rates are comparable.
- Texas — No income tax, 8.2% avg sales tax, 1.60% property tax. Texas has no income tax but much higher property taxes than New Mexico.
- Colorado — 4.4% flat income tax, 7.77% avg sales tax, 0.49% property tax. Colorado's flat rate is competitive, with lower property taxes but higher combined sales tax.
- Oklahoma — 0.25%-4.75% graduated income tax, 8.97% avg sales tax, 0.85% property tax. Oklahoma has lower income tax rates but significantly higher combined sales taxes.
Use our state comparison calculator to compare New Mexico to your current state.
Frequently Asked Questions
New Mexico has graduated brackets from 1.7% to 5.9%. The top rate applies to income over $210,000 (single) or $315,000 (married). Recent reform increased the top rate while reducing burdens on moderate incomes.
NM levies a Gross Receipts Tax on businesses instead of a traditional sales tax. The state rate is 5.0%, with local add-ons bringing combined rates to 5.0%-9%+. It applies to goods and many services.
Social Security benefits are exempt for taxpayers with AGI under $100,000 (single) or $150,000 (married). This exemption covers the vast majority of New Mexico retirees.
New Mexico's effective rate is approximately 0.67%, well below the national average. Property value increases for tax purposes are capped at 3% per year for existing homes.
Yes. Social Security is largely exempt, there is an $8,000 per-person retirement income deduction for those 65+, property taxes are low, and the cost of living is affordable.