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New Mexico State Taxes

New Mexico State Taxes

State Taxes at a Glance – New Mexico

Type of Tax2023
Individual Rates1.70% to 5.90%
Corporate / Business Tax Rates4.80% to 5.90%
Gross Receipts TaxNone
Sales Tax7.72% (average)
Property Taxes0.66% as a percentage of primary home
Estate or Inheritance TaxNone

State Income Taxes in New Mexico

The state of New Mexico has an individual income tax. Like most states with income tax, it is calculated on a marginal scale whose range is from 1.70% to 5.90%.

State Business & Franchise Taxes in New Mexico

New Mexico’s corporate tax is calculated on a marginal scale whose range is from 4.8% to 5.9%. They only have 2 tax brackets, the highest bracket starting at $500,000.

In addition to the corporate tax, New Mexico also has a franchise tax. The franchise tax is a separate annual $50 fee applied to both C Corporations and S Corporations.

Sales and Property Taxes in New Mexico

Sales taxes – Like many states, New Mexico has multiple tax rates. One at the state level and another at the local level. The state rate is 5.00% the average local rate is 2.72% (total average rate for New Mexico Sales Tax is 7.72%). You should take note that groceries in New Mexico are not subject to sales tax.

New Mexico also has a broad sales tax base. Similar to HawaiiNorth Dakota, and South Dakota, the State of New Mexico has increased its sales tax base to include many business-to-business personal services.

Property Taxes in New Mexico – the average property tax rate for residential property in the state of New Mexico is 0.66%, making it a very preferable place to own property. The property tax here is ranked as the 4th lowest per capita with average tax collections of only $792.

New Mexico DMV fees

New Mexico’s annual DMV fees are based on weight, and not the value of the vehicle. Therefore, they are not deductible on your Federal Tax Return. If you would like to learn more about New Mexico’s DMV fees, here is a link.

However, there is a 4% excise sales tax on the sale of all automobiles in New Mexico. This excise sales tax is deductible.

New Mexico Domicile

If you maintain a permanent place of abode for over 185 days, you are considered a New Mexico resident.

New Mexico Tax on Social Security Benefits

New Mexico is one of the few states in the union that taxes Social Security Benefits. However, there are exemptions under certain cases. In you are exempt from tax if you’re:

  • Married filing jointly and you make less than $150,000
  • Single and you make less than $100,000

All others must partially pay tax on social security benefits.

Payroll Taxes in New Mexico

Unemployment taxes usually consist of three factors. They are the wage base, range of rates, number of schedules. Below is an outline of the three:

  • Wage Base – New Mexico has a wage base of $30,100
  • UI Rates – range from 0.33% to 6.40%
  • Schedules – New Mexico has a single rate schedule regarding UI.

New Mexico Business Entities – LLCs

Nex Mexico is the most inexpensive place to set up your LLC in the country (tied with Arizona and Missouri). Here’s what you need to know:

  • New Mexico has no annual LLC fee, yay!
  • When you register with the state, you pay a one time fee of $50
  • Secretary of State of New Mexico website –click here

New Mexico Tax Contact Phone Numbers

Important phone numbers for the New Mexico Department of Taxation:

  • Website:
  • Phone# for Individuals – (866) 285-2996
  • Phone# for Businesses – Same