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Tax Brackets
New Mexico Income Tax Brackets 2026
| Income Range | Tax Rate | Tax on Bracket |
|---|---|---|
| $0 - $5,500 | 1.7% | $94 |
| $5,501 - $11,000 | 3.2% | $176 |
| $11,001 - $16,000 | 4.7% | $235 |
| $16,001 - $210,000 | 4.9% | $9,506 |
| $210,001 - $315,000 | 5.3% | $5,565 |
| Over $315,001 | 5.9% | -- |
Overview
Understanding New Mexico Taxes
New Mexico levies a graduated income tax with six brackets, ranging from 1.70% to 5.90%. The top rate of 5.90% applies to income over $315,000 for single filers and $420,000 for married couples. For most workers, the 4.90% rate (which applies from $16,000 to $210,000 single) is the effective marginal rate.
New Mexico conforms to the federal standard deduction ($14,600 single, $29,200 married filing jointly). The state provides a dependent exemption of $4,150 per qualifying dependent but does not offer a personal exemption for the taxpayer or spouse. New Mexico uses federal adjusted gross income as the starting point.
New Mexico fully exempts Social Security benefits from state income tax. The state also provides generous tax relief for lower-income seniors: the Low Income Comprehensive Tax Rebate provides a refundable credit for residents with income below $36,000. New Mexico does not tax military retirement pay for veterans with 20+ years of service or who are medically retired.
New Mexico levies a Gross Receipts Tax (GRT) instead of a traditional sales tax. The state rate is 4.875% with local additions bringing the average combined rate to approximately 7.72%. Unlike a traditional sales tax, the GRT applies to services as well as goods, including professional services, construction, and healthcare. Groceries were made exempt from the state portion of the GRT effective 2025.
Property taxes in New Mexico are among the lowest in the nation, with an average effective rate of approximately 0.67%. A generous head-of-family exemption and veteran's exemption reduce the assessed value for qualifying homeowners. The 33-1/3% assessment ratio further reduces the effective tax burden on residential property.
New Mexico's cost-of-living index is approximately 91, about 9% below the national average. Albuquerque is the largest city and offers affordable living with access to healthcare, education (University of New Mexico), and the Sandia National Laboratories job market. Santa Fe, while more expensive than Albuquerque, remains more affordable than comparable artistic and cultural cities.
FAQ
Frequently Asked Questions
Smart Moves
Tax Tips for New Mexico Residents
New Mexico's GRT applies to services including professional, medical, and construction services — factor this into costs when hiring contractors
Military veterans with 20+ years of service can exempt their retirement pay from NM income tax
The Low Income Comprehensive Tax Rebate provides refundable credits for residents with income under $36,000
Other States
Calculate Your Paycheck in Other States
For educational purposes only -- not financial or tax advice. Tax rates shown are based on 2026 data and may not reflect recent changes. Consult a tax professional for your specific situation.