New Mexico Tax Guide
5.9%top marginal rate
New Mexico has a progressive income tax with a top rate of 5.9%. Property taxes are low and the state has no estate tax. The state's Gross Receipts Tax functions similarly to a sales tax. New Mexico is one of the most tax-friendly states for retirees.
New Mexico Tax at a Glance
Income Tax
5.9%
Top marginal rate
Sales Tax
5%
State-level rate
Property Tax
0.8%
27% below the national average
Estate Tax
No
No state estate tax
How New Mexico Compares to the National Average
Notable Tax Facts
- Uses a Gross Receipts Tax instead of a traditional sales tax
- Does not tax Social Security benefits
- Low property taxes at about 0.80% effective rate
- One of the most retirement-friendly states for taxes
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New Mexico Tax FAQ
What is New Mexico's income tax rate?
New Mexico has a progressive income tax with rates ranging from 1.7% to 5.9%. The top rate applies to income over $210,000 for single filers.
What is the Gross Receipts Tax?
New Mexico's Gross Receipts Tax (GRT) functions like a sales tax but is technically levied on businesses. The base state rate is 5.0%, with local additions bringing combined rates to 7-9% in most areas.
Is New Mexico good for retirees?
Yes. New Mexico does not tax Social Security benefits and offers an exemption on retirement income for those 65 and older. Low property taxes and no estate tax add to the appeal.
Does New Mexico tax Social Security?
No. As of 2022, New Mexico fully exempts Social Security benefits from state income tax.
Compare With Other States
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Educational content, not tax advice. Tax rates are approximate and subject to change. Consult a qualified CPA or tax professional for advice specific to your situation. Data reflects widely-known public information as of early 2026.