New Mexico state taxes at a glance
| Individual income tax | Graduated (bracket) income tax |
|---|---|
| Rate structure | Graduated rates from 1.5% up to 5.9% in Tax Foundation’s 2026 table, plus a gross receipts tax instead of a conventional sales tax. Social Security is exempt below income limits. Verify current-year figures. |
| Tax agency | New Mexico Taxation and Revenue Department (TRD) |
| Main individual return | Form PIT-1 (residents, nonresidents and part-year residents) |
| Local income taxes | No local income taxes. |
| Sales tax | New Mexico imposes a gross receipts tax (GRT) on businesses rather than a sales tax on consumers, though it is usually passed on and shown on receipts. The state rate is 4.875% and local rates are added. |
| Property tax | Assessed by county assessors. New Mexico limits how much the taxable value of a residential property can rise each year (a 3% cap) unless the property sells or is improved; check your county assessor. |
| Retirement & Social Security | Social Security income is fully deductible for filers with AGI up to $100,000 (single) or $150,000 (joint, head of household or surviving spouse); above that, federally taxable benefits are included. |
Verify current-year figures: state rates, brackets, credits and filing rules change. Treat this page as a starting orientation and confirm details on the New Mexico Taxation and Revenue Department (TRD) website.
How New Mexico income tax works
New Mexico’s personal income tax has six brackets in Tax Foundation’s 2026 table, rising from 1.5% to 5.9% on income above $210,000 for single filers ($315,000 for joint filers). New Mexico starts from federal figures: Tax Foundation lists it among states that include the federal standard deduction in their starting point. It also offers a deduction of $4,000 for dependents other than the first, to replace the suspended federal personal exemption, and several state credits, including the Working Families Tax Credit and other refundable credits, so check TRD’s current-year credit list.
The state’s Social Security rule is based on income. TRD’s guidance for 2026 says benefits are exempt for filers with adjusted gross income of $100,000 or less (single) or $150,000 or less for joint, head-of-household and surviving-spouse filers (the limit for married filing separately is lower); above those limits, the federally taxable portion is included in New Mexico taxable income. See our Social Security guide for the federal rules.
New Mexico’s version of a sales tax is the gross receipts tax (GRT). Legally it is a tax on businesses’ receipts from selling property or services in the state, applied at each stage including many business-to-business services, though businesses usually show it on receipts. Tax Foundation notes the state rate is 4.875%, and that the rate could return to 5.125% if gross receipts revenue falls below a specified threshold in fiscal years 2026 through 2029. Combined rates vary by location because local governments add their own rates.
Filing your New Mexico return and free options
New Mexico’s Taxpayer Access Point (TAP) lets eligible taxpayers file PIT-1 returns online for free; TRD says first-time New Mexico personal income tax filers must use third-party software or file by paper. TAP also supports gross receipts filing and payments. The state began accepting electronic returns on January 16 for the 2025 tax year, and the filing deadline was April 15.
See our free filing hub for the federal return and VITA for in-person help. If you cannot pay, see what to do if you can’t pay, and check state refund status for tracking.
For the federal side, see our guides to free federal filing options and the complete guide to filing taxes.
Things New Mexico residents often ask about
- GRT is on the business: it can apply to many business-to-business services, and the rate varies by location.
- Social Security exemption is income-tested: $100,000 single and $150,000 joint AGI limits for 2026.
- Dependent deduction: $4,000 for dependents other than the first replaces the suspended federal personal exemption.
- TAP is not for first-time filers: new New Mexico filers use software or paper.
- Residential valuation cap: a 3% annual cap applies to the taxable value of residential property until a sale or improvement.
Official New Mexico links
- New Mexico Taxation and Revenue Department
- New Mexico: online services (TAP)
- New Mexico: Social Security income tax exemption
- Federation of Tax Administrators: State tax agencies
Frequently asked questions
Does New Mexico tax Social Security?
It exempts benefits for filers with AGI up to $100,000 (single) or $150,000 (joint, head of household or surviving spouse); above that, the federally taxable portion is included.
What is the New Mexico gross receipts tax?
A tax on businesses’ receipts from selling goods and services in the state, usually passed on to customers and shown on receipts. It replaces a conventional sales tax.
Can I file my New Mexico return for free?
TRD’s Taxpayer Access Point lets eligible taxpayers file PIT-1 for free, but first-time New Mexico filers must use third-party software or paper.
General information only — not tax, legal or financial advice. Tax figures change every year; verify the current numbers at IRS.gov or with a qualified professional. Read the full disclaimer.