New Mexico's State and Local Tax Burden Below Average
New Mexico’s state and local tax burden percentage has ranked among the nation’s lowest, currently estimated at 8.7% of income (37th nationally), below the current national average of 10.3%.
Figures are based on 2019 calendar year.
NM Taxation at a glance:
- Property Tax Collections per Capita: $832 (#46 of 50 states)
- Top Corporate Income Tax (three brackets): 5.9% (2022)
- Top Individual Income Tax (four brackets): 4.9% (2022)
- Gross Receipts Tax: 5.125% (2022 – dropping to 4.875% in July)
- Unemployment Insurance: 5.4% (ranked 8th lowest in usa)
- Annual Franchise Fee: ($50)
- Business Inventory Tax: None
New Mexico Property Taxes: Among the Nation's Lowest
New Mexico is one of the 37 states that collect property taxes at both the state and local levels. New Mexico’s localities collected $146 per capita in property taxes in fiscal year 2020. At the state level, New Mexico collected $685 per capita in property taxes during FY 2013. With an estimated combined State-Local Tax Burden of 8.8%, New Mexico registered the 44th lowest State-Local Tax Burden in the nation in 2019.
|Local Property Tax Rate in Mills (2021)||Residential||Non-Residential|
|City of Gallup||36.461||42.897|
New Mexico's Corporate Income Tax System
New Mexico’s corporate tax structure consists of three brackets, ranging from 4.8% to 5.9%, which kicks in at $500,000 of net income. Among states levying corporate income taxes, this top tax rate ranks New Mexico 22nd nationally.
In 2022, state-level corporate tax collections (excluding local taxes), New Mexico ranked 28th highest nationally.
New Mexico's Individual Income Tax System
New Mexico’s personal income tax system consists of four brackets and a top rate of 4.9% kicking in at an income level of $16,000. Among state levying personal income taxes, New Mexico’s top rate is 37th highest nationally. New Mexico’s 2020 state and local individual income tax collections were $640 per person, which ranked 37th highest nationally.
New Mexico's Gross Receipts Tax
The gross receipts tax rate varies throughout the state from 5.125% to 8.6875% depending on the location of the business. The rate varies because the total rate combines rates imposed by the state, counties, and, if applicable, municipalities where the businesses are located. Although the gross receipts tax is imposed on businesses, it is common for a business to pass the gross receipts tax on to the customer either by separately stating it on the invoice or by combining the tax with the selling price.
The business pays the total gross receipts tax to the state, which then distributes the counties' and municipalities' portions to them. The tax is on the business’s gross receipts. Whether the receipts (net of returns and allowances) are taxable depends on whether the business can take advantage of an exemption or deduction.
|Local Sales Tax|
|City of Gallup||8.32%|
New Mexico's Unemployment Insurance Contribution
A new employer in New Mexico starts out with UI tax rate of the greater of their industry average Unemployment Insurance Contribution rate or 1.0%. Industry classifications for contributory, experienced employers are used to determine the average industry rates of new employers. Based on the NAICS code for the establishment, this is the employer’s Assigned Industry Rate. This rate will remain in effect until the employer has acquired two years as an experience rate employer. The annual industry rate averages can be found at www.dws.state.nm.us.