Income Tax for New Mexico (2026)

How This Calculator Works in New Mexico

This calculator applies New Mexico's 2026 tax brackets and rates to estimate your state income tax liability. Enter your income and filing status to see your marginal rate, effective rate, and estimated tax owed.

New Mexico Overview

New Mexico levies a progressive income tax with 5 brackets and a top rate of 5.9%. The state fully exempts Social Security benefits and military retirement pay from taxation. Instead of a sales tax, New Mexico uses a gross receipts tax that varies by location and applies broadly to services — an important distinction for businesses operating in the state.

How New Mexico Compares

New Mexico's top income tax rate of 5.9% compares to Arizona at 2.5% and Texas at 0%. The rate differences can meaningfully impact take-home pay for workers near state borders.

New Mexico's income tax rate of 5.9% compares to a national average of approximately 5.04%. This is above the national average.

Tips for New Mexico Residents

• 1New Mexico's top income tax rate is 5.9% on income over $210,000 (single), with 5 brackets starting at 1.7%.
• 2The state fully exempts Social Security benefits from income tax and offers a low-income tax rebate for qualifying filers.
• 3New Mexico does not tax military retirement pay, making it attractive for veterans, especially near Kirtland AFB, White Sands, and Holloman AFB.
• 4The state has a gross receipts tax (GRT) instead of a traditional sales tax — rates vary by location from about 5% to 9%, and the GRT applies to services as well as goods.
• 5New Mexico's film production tax credits have made it a major film industry hub, which indirectly affects the state's revenue structure.

Frequently Asked Questions