New Mexico State Income TaxesThe state of New Mexico collects income taxes on April 15th, much the way the IRS and 44 other states do.
This page:
• Lists basic New Mexico state tax information
• Links to the major New Mexico income tax forms
• Shows you how you can save time and money by e-filing
New Mexico state taxes at a glance:Tax Rate Range: Low - 1.7%; High - 5.3%
Income Brackets*: Lowest - $5,500; Highest - $16,00
Number of Brackets: 4
Personal Exemptions: Single - $3,300; Married - $6,600; Dependents - $3,300
Standard Deduction: Federal Amount
Medical/Dental Deduction: Credit of 3% of unreimbursed prescription drug expenses to maximum of $150 per individual or $300 per return
Federal Income Tax Deduction: None
Note:*The tax brackets reported are for single individuals. For married couples filing jointly, the same rates apply for income under $8,000 and over $100,000.
Filing your New Mexico state income tax returnIn New Mexico, the filing status on your state return must to be the same as the filing status on your federal income tax return.
Similarly, you must maintain the same method of taking deductions from one return to the other. For instance, if you itemize your deductions on your federal return, you must also itemize on your state return.
New Mexico offers quite a few income tax credits to its taxpayers. A full list is available in the state income tax instruction booklet. The following is a list of the more common tax credits you may be eligible to claim.
• welfare to work program credit
• rural job tax credit
• taxes paid to another state
New Mexico allows a variety of tax deductions as well. Again, a full list is available in the tax instruction booklet, but a short list of common deductions can be found below.
• msa saving account
• contributions to education trust board account
• exemption for adopted or special needs children
Also, New Mexico offers a low-income tax rebate for those who meet specific requirements, among them that the taxpayer has a modified adjusted gross income of $22,000 or less.
Further tax relief is given to taxpayers older than 65 in the form of a tax deduction of $8,000 or low-income taxpayers in the form of a property tax rebate.
Since retirement income follows the recipient to the state of residency, any retirement benefits you receive, regardless of whether the source is outside of New Mexico is taxable to New Mexico if you are a resident.
In New Mexico, there are no special tax rates for capital gains. Since the New Mexico tax return is based on the adjusted gross income on the federal return, which already includes taxable capital gains, they are, by default, taxed at the same rate as the rest of your income.
However, there is a deduction of up to $1,000 on net capital gains. This is taken in PIT-ADJ Schedule.
Finally, remember that as a wage earner in New Mexico, you are required to file a state income tax return. This rule holds true for nonresidents as well as residents.
Sidebar
You can work on your New Mexico tax return online while filing your federal return (you can work on it for free, and pay nothing until you are ready to file).
Note: if you are filing more than one state return, you must file a paper return for each additional state, as TurboTax for The Web only allows one state prep.
New Mexico income tax formsThe main New Mexico tax forms are:
Form PIT-1 | 2006 New Mexico Individual Income Tax Return| Instructions
PIT-1-RC | Rebate and Credit Schedule
PIT-ADJ | Schedule of Additions and Deductions
If you need New Mexico income tax forms that are not listed here, you can download them from the New Mexico tax forms site.
Or, just simply e-file!
Additional NM state taxes helpIf you need help with your federal tax return, start with our basic guide to tax filing.
For additional help with filing NM income tax returns, see the official site of the New Mexico Taxation and Revenue Department.
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