New Mexico State Tax: Overview
New Mexico has an income tax with a top rate of 5.9%, but your income taxes are waived if you reached 100 years of age. And this year, New Mexico approved tax rebate checks that will go out to eligible taxpayers in June.
Property taxes in New Mexico are relatively low, and the state's gas tax is not high when compared to gas taxes in other states.
[Data for this state tax guide was gathered from several sources including the U.S. Census Bureau, the state’s government website, the Sales Tax Handbook, and the Tax Foundation. Property taxes are cited as a rate percentage rather than the assessed value.]
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New Mexico State Tax: Income Taxes
New Mexico has decent income tax rates that max out at 5.9%, but most people pay the 4.9% tax rate. Another great thing about New Mexico state tax is that it has become a more tax-friendly state for retirees over the past year.
New Mexico tax on retirement benefits: As of 2022, New Mexico does not tax most Social Security benefits. Single and married filing separately filers can make up to $100,000 without having their Social Security taxed. All other filers can make up to $150,000. Railroad Retirement benefits are fully exempt.
In addition, taxpayers age 100 or older can exclude all income. (Since New Mexico is a community property state, married centenarians can only exclude half of community income.)
Note: New Mexico also offers partial income tax exemptions to seniors 65 or older with incomes up to $51,000 for married filing jointly and head of household filers. The income threshold may be lower for single filers.
New Mexico Income Tax Range: Single filers
| Up to $5,500 | 1.7% |
| $5,501 to $11,000 | 3.2% |
| $11,001 to $16,000 | 4.7% |
| $16,001 to $210,000 | 4.9% |
| More than $210,000 | 5.9% |
New Mexico Income Tax Range: Married filing separately
| $4,000 or less | 1.7% |
| $4,001 to $8,000 | 3.2% |
| $8,001 to $12,000 | 4.7% |
| $12,001 to $157,500 | 4.9% |
| More than $157,500 | 5.9% |
New Mexico Income Tax Range: Head of household and married filing jointly
| Up to $8,000 | 1.7% |
| $8,001 to $16,000 | 3.2% |
| $16,001 to $24,000 | 4.7% |
| $24,001 to $315,000 | 4.9% |
| More than $315,000 | 5.9% |
New Mexico Sales Tax
New Mexico has a 5% sales tax rate. Localities can add as much as 3.813%, and the average combined rate is 7.72%, according to the Tax Foundation. Technically, the sales tax in New Mexico is not sales at all. It is a gross receipts tax, which means that the seller pays a portion of their revenue to the state. Sellers typically pass these costs to the consumer.
- Groceries are tax-exempt.
- Prescription drugs are tax-exempt.
- The "Pink Tax" was eliminated in 2022.
How Much Are Property Taxes in New Mexico?
New Mexico has a low average effective property tax rate of 0.8%, and average property tax bills are below the national average.
New Mexico Property Tax Breaks for Retirees
Property Tax Freeze: Homeowners 65 or older may apply to have the tax valuation of their property frozen.
- Homeowners with disabilities may qualify for the property tax freeze before the age of 65.
- The property tax freeze may become permanent after three years.
New Mexico Vehicle Taxes
Motor vehicle purchases are exempt from ordinary sales tax, but they are taxable under a special 4% excise tax.
New Mexico's gas tax is $0.189 per gallon when considering state gas tax and other state taxes and fees.
New Mexico Taxes on Alcohol and Tobacco
| Cigarettes | $1.66 per pack |
| Other tobacco products | 25% of the product value |
| Vapor products (open) | 12.5% of product value |
| Vapor products (closed) | $0.50 per cartridge |
| Beer | $0.41 per gallon |
| Wine | $1.70 per gallon |
| Liquor | $6.06 per gallon |
| Marijuana | 12% excise tax (will gradually increase to 18% by 2030) |
New Mexico Estate and Inheritance Taxes
New Mexico is one of the states with no estate or inheritance tax.
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