NEW MEXICO
Return to Retiree Tax Map
NICKNAME
The Land of Enchantment
BOTTOM LINE: MIXED TAX PICTURE
New Mexico does not exclude Social Security benefits from taxation, but it allows Social Security income to be included as part of an overall retirement-income exemption of up to $8,000 per person, subject to income restrictions. Personal income tax rates top out at 4.9% on taxable income over $16,000 for single filers and over $24,000 for married couples filing jointly. New Mexico has a statewide gross receipts tax, similar to a sales tax. Property-tax rates vary substantially and depend on property type and location.
STATE SALES TAX
5.125% in the form of a gross receipts tax. County and city taxes may add another 3.56% to the combined tax rate. Prescription drugs are exempt.
INCOME-TAX RANGE
Low: 1.7% (on up to $5,500 of taxable income for single filers and $8,000 for joint filers)
High: 4.9% (on taxable income over $16,000 for single filers and over $24,000 for married couples filing jointly)
SOCIAL SECURITY
Benefits are taxed. But Social Security income can be included as part of an overall retirement-income exemption of up to $8,000 per person, subject to income restrictions.
EXEMPTIONS FOR OTHER RETIREMENT INCOME
The state offers a low- and middle-income exemption. The maximum exemption is $2,500. To qualify, adjusted gross income must be equal to or less than $36,667 (single), $27,500 (married filing separately) or $55,000 (married filing jointly).
An income exemption of up to $8,000 applies for people 65 and older. Single filers with an adjusted gross income under $28,500, married couples filing jointly earning less than $51,000 and married taxpayers filing separately with less than $25,500 qualify for this exemption.
PROPERTY TAXES
Property is subject to state and local taxes. Rates vary substantially and depend on property type and location. The statewide weighted average rates are about $26.47 per $1,000 of residential property. The valuation of a residence that did not change hands in the prior year may not increase by more than 3% annually. One-third of the property's market value is its taxable value. The taxable value may be further reduced by exemptions of $2,000 for heads of households and $4,000 for veterans.
Tax breaks for seniors: There is a property-tax rebate for seniors. Homeowners 65 and older who earn $18,000 ($25,000 in Sandoval County) or less are eligible for a credit of up to $250 (married filing jointly) or $125 (single taxpayers).
INHERITANCE AND ESTATE TAXES
There is no inheritance tax or estate tax.
Visit RetirementLiving.com for a complete rundown of taxes in New Mexico.
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