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New Mexico Tax Guide: Income Tax & Gross Receipts

Navigate New Mexico's income tax brackets, unique gross receipts tax, and retirement-friendly provisions for 2025.

5.9%
Top Income Tax Rate
7.72%
Combined GRT
0.67%
Property Tax Rate
#34
Tax Burden Rank

Tax Overview

New Mexico uses a progressive income tax system with five brackets, reaching a top rate of 5.9% on income above $210,000 for single filers. The state recently added higher brackets to increase taxes on the wealthiest residents. However, New Mexico is also one of the most retirement-friendly states, exempting a significant portion of retirement income from taxation.

Instead of a traditional sales tax, New Mexico imposes a Gross Receipts Tax (GRT) that functions similarly but applies to the seller rather than the buyer. The state rate is 5.0%, with local additions that can push the combined rate above 8% in some areas. Like a sales tax, the GRT applies to most goods and many services, though groceries were recently made exempt from the state portion.

Property taxes in New Mexico are among the lowest in the nation, with effective rates around 0.67%. The state constitution caps property tax rates, and residential properties receive a head-of-family exemption that further reduces the tax base. New Mexico also offers a low-income comprehensive tax rebate and a property tax rebate for low-income residents. These low property taxes, combined with generous retirement income exemptions, make New Mexico attractive for retirees.

Income Tax

New Mexico recently added a 5.9% top bracket for high earners. The state is very retirement-friendly with generous income exemptions.

Income RangeTax Rate
$0 – $5,5001.7%
$5,501 – $11,0003.2%
$11,001 – $16,0004.7%
$16,001 – $210,0004.9%
$210,001 +5.9%

Sales Tax

State Rate5.00%
Avg. Local Rate2.72%
Combined Rate7.72%

Property Tax

Effective Rate0.67%
Median Annual Bill$1,272

Key Deductions in New Mexico

  • ✓Low-income comprehensive tax rebate
  • ✓Retirement income exemption (up to $8,000 per person, age 65+)
  • ✓Social Security income exemption for most residents
  • ✓Property tax rebate for low-income residents
  • ✓Medical care expense deduction
  • ✓Working families tax credit (refundable, 25% of federal EITC)

Filing Information

Filing Deadline: April 15

Tax Authority: New Mexico Taxation and Revenue Department

Phone: (866) 285-2996

Website: https://www.tax.newmexico.gov

Frequently Asked Questions

What is New Mexico's Gross Receipts Tax?
The GRT is New Mexico's equivalent of a sales tax, but it is technically levied on businesses rather than consumers. The state rate is 5.0% with local additions. Like a sales tax, the cost is typically passed on to consumers. Groceries are exempt from the state portion.
Is New Mexico retirement-friendly?
Yes, New Mexico offers generous retirement income exemptions. Residents 65+ can exempt up to $8,000 of retirement income per person. Social Security is exempt for most residents, and property taxes are very low.
Does New Mexico tax Social Security?
New Mexico exempts Social Security benefits from state income tax for most residents. The exemption phases out at higher income levels, but the vast majority of Social Security recipients pay no state tax on their benefits.
Are groceries taxed in New Mexico?
New Mexico recently exempted groceries from the state portion of the Gross Receipts Tax. Local GRT additions may still apply to grocery purchases in some jurisdictions.

Neighboring State Guides

ColoradoOklahomaTexasArizonaUtah

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