New Mexico has a progressive income tax system with 6 brackets and rates ranging from 1.5% to 5.9%. The top rate applies to income over $210,000 for single filers, placing New Mexico in the mid-range of state income tax rates.
Single filer, standard deduction, 2025 tax year. Take-home is after federal + state income tax (excludes FICA).
2025 Tax Brackets — Single Filer
Taxable Income
Rate
$0 – $5,500
1.5%
$5,500 – $16,500
3.2%
$16,500 – $33,500
4.3%
$33,500 – $66,500
4.7%
$66,500 – $210,000
4.9%
Over $210,000
5.9%
2025 Tax Brackets — Married Filing Jointly
Taxable Income
Rate
$0 – $8,000
1.5%
$8,000 – $25,000
3.2%
$25,000 – $50,000
4.3%
$50,000 – $100,000
4.7%
$100,000 – $315,000
4.9%
Over $315,000
5.9%
Tax Overview
This state uses a progressive income tax system with multiple brackets, similar to the federal system. Only the income within each bracket is taxed at that rate, so your effective state rate is lower than the top bracket. Tax planning strategies include maximizing pre-tax retirement contributions to reduce state-taxable income.
Tax Planning Tip
In a progressive-bracket state, pre-tax 401(k) and HSA contributions reduce your state tax bill along with federal tax. If you are near a bracket boundary, an additional contribution can drop you into a lower state bracket.
New Mexico's progressive tax applies marginal rates to each bracket of income. The state uses federal adjusted gross income as the starting point and offers various deductions and credits. New Mexico exempts Social Security benefits for taxpayers whose income is under a set limit that depends on filing status; above the limit the benefits are taxed to the extent they are in federal adjusted gross income.
Property Tax & Cost of Living
Property Tax Rate
0.67%
$1,910/yr on $285,000 home
Cost of Living Index
92.2
7.799999999999997% below national average
Median Home Value
$285,000
Housing index: 73.6 (avg = 100)
Property tax rate is the state average effective rate. Actual rates vary by county. COL index from BEA Regional Price Parities by state (2024, all items; national average = 100).
New Mexico has a progressive income tax with 6 brackets ranging from 1.5% to 5.9%. Your effective rate depends on your total taxable income.
Does New Mexico tax Social Security benefits?
New Mexico exempts Social Security benefits for taxpayers whose income is under a set limit that depends on filing status; above the limit the benefits are taxed to the extent they are in federal adjusted gross income.
Whatever your state charges, get a reminder before each federal tax deadline. One email before each quarterly estimated tax payment (Tax Day included), plus one when the
IRS publishes next year's numbers. About five a year; you confirm once and can unsubscribe anytime.
