New Mexico tax rates cover several separate taxes, each with its own structure. The state charges a gross receipts tax at a base rate of 4.875%, a progressive personal income tax running from 1.5% to 5.9%, a flat 5.9% corporate income tax, property taxes calculated on one-third of assessed value, and a 4% motor vehicle excise tax. There is no state estate tax or inheritance tax. What you actually pay depends on where you live, what you earn, and what you’re buying.
Gross Receipts Tax
New Mexico uses a gross receipts tax (GRT) instead of a traditional sales tax. It technically falls on the business, but almost every business passes it to the customer at checkout. The state base rate has been 4.875% since July 1, 2023.1Justia. New Mexico Code 7-9-4 – Imposition and Rate of Tax; Denomination as “Gross Receipts Tax” It applies broadly to goods, services, and leases.
The rate on your receipt is almost always higher than the base, because cities and counties add local option rates. Combined rates across the state generally fall between roughly 5% and 9% depending on the jurisdiction.2Taxation and Revenue New Mexico. What Is Destination-Based Sourcing? Albuquerque, Santa Fe, and Las Cruces each carry different combined rates. Since July 1, 2021, the applicable rate is based on where the customer receives the product or service, not where the seller is located. Order something online from an Albuquerque shop and have it shipped to Taos, and the Taos rate applies.
Qualifying groceries are effectively exempt. Retailers deduct receipts from food items that would qualify under the federal SNAP definition before calculating their GRT, so the tax doesn’t reach you at the register. Prepared foods, alcohol, and non-food items like cleaning supplies still carry the full rate.3Taxation and Revenue New Mexico. FYI-201 Gross Receipts Tax and Certain Foods
Personal Income Tax Brackets
The state income tax is progressive with six brackets, starting at 1.5% and topping out at 5.9%. The top rate begins at $210,000 for single filers and $315,000 for married couples filing jointly.4Justia. New Mexico Code 7-2-7 – Individual Income Tax Rates The tax applies to net income after deductions.
Single filers and married individuals filing separately pay:
- 1.5% on the first $5,500
- 3.2% on income from $5,500 to $16,500
- 4.3% on income from $16,500 to $33,500
- 4.7% on income from $33,500 to $100,000
- 4.9% on income from $100,000 to $210,000
- 5.9% on income above $210,000
Married couples filing jointly and heads of household have wider bands:4Justia. New Mexico Code 7-2-7 – Individual Income Tax Rates
- 1.5% on the first $8,000
- 3.2% on income from $8,000 to $25,000
- 4.3% on income from $25,000 to $50,000
- 4.7% on income from $50,000 to $100,000
- 4.9% on income from $100,000 to $315,000
- 5.9% on income above $315,000
These are marginal rates. A single filer earning $220,000 pays 5.9% only on the amount above $210,000; the rest is taxed at the lower rates for each bracket it passes through. Returns are due April 15. You can extend the paperwork to October 15, but any tax owed still needs to be paid by April 15 to avoid penalties and interest.
Capital Gains
Capital gains are taxed as ordinary income, but a deduction softens the impact. You can deduct the greater of $2,500 of net capital gain income or 40% of up to $1,000,000 in net capital gains from the sale of a New Mexico business.5Justia. New Mexico Code 7-2-34 – Deduction; Net Capital Gain Income For business owners, the second option can shield up to $400,000 in gains from state tax. Married couples filing separately each get half of what they would receive on a joint return.
Corporate Income Tax
Beginning January 1, 2025, New Mexico charges a flat 5.9% on all corporate taxable income. The prior two-tier structure (4.8% on the first $500,000 and 5.9% above that) is gone.6Justia. New Mexico Code 7-2A-5 – Corporate Income Tax Rates Taxable income is the portion of federal taxable income apportioned to New Mexico based on in-state activity. The change raised the tax bill for smaller corporations while leaving larger ones unchanged: a company with $200,000 of New Mexico taxable income now pays $11,800 rather than $9,600.
Property Tax
Property taxes are calculated on one-third of a property’s assessed value. If your home is assessed at $300,000, the taxable value is $100,000.7New Mexico Compilation Commission. 3.6.6 NMAC – Provisions for Imposition of Tax – Applicability That taxable value is multiplied by the mill rate to produce your bill. One mill equals one dollar per $1,000 of taxable value, so a 25-mill rate on a $100,000 taxable value comes to $2,500 a year.
The mill rate stacks from several authorities: county, municipality, school district, and sometimes special districts. Because the mix differs by location, effective rates vary widely across the state. Residential rates are generally lower than commercial ones.
Veteran Exemption
Qualified veterans get an exemption that reduces taxable value. For tax year 2026 the amount is $10,000, up from the prior $4,000, and it will adjust annually for inflation.8New Mexico Legislature. New Mexico House Bill HB0047 Unremarried surviving spouses also qualify. Veterans with a VA-rated disability get a proportional exemption tied to the rating; a 100% disabled veteran pays no property tax.
Head-of-Household Exemption
A New Mexico resident who qualifies as head of a family can exempt $2,000 of their home’s taxable value. It’s limited to one property per household and must be the primary residence.
Motor Vehicle Excise Tax
Buying a vehicle in New Mexico, or titling one here for the first time, triggers a 4% excise tax on the purchase price. It’s collected at registration and is separate from the gross receipts tax.9Taxation and Revenue New Mexico. Motor Vehicle Excise Tax A trade-in reduces the taxable amount: a $30,000 car with a $10,000 trade-in leaves $20,000 subject to the 4%, or $800.10New Mexico State Records Center and Archives. 3.11.4 NMAC – Sale or Transfer of Vehicles
The tax applies to both dealer and private-party sales. When the price paid doesn’t reflect actual value (common in family transfers), the state can apply the 4% to reasonable market value instead. Underpaying and getting caught adds a 50% penalty, effectively raising the rate to 6%.9Taxation and Revenue New Mexico. Motor Vehicle Excise Tax
No Estate or Inheritance Tax
New Mexico does not levy a state estate tax or an inheritance tax. The estate tax was phased out as of January 1, 2005 following changes in federal law. Estates required to file a federal Form 706 must also file the New Mexico return, but the state issues a certificate of no tax due rather than collecting anything.11Taxation and Revenue New Mexico. Estate, Trust, and Fiduciary Income Tax Beneficiaries owe no state tax on the inheritance itself, though income later generated by inherited assets is subject to the regular income tax.