Taxes in New Mexico


Retirement Living takes an unbiased approach to our reviews. We may earn money when you click a partner link. Learn More

New Mexico - State

New Mexico’s tax laws aren’t very retirement-friendly. The state levies a fee on most income and purchases, with a few exemptions for residents over 100. Below, we explain various New Mexico state taxes affecting retirement income, such as sales tax, inheritance tax, and property taxes. We’ve also provided details about tax credits, exemptions, relief programs, and retirement-related tax breaks.

For information regarding taxes in other states, see Retirement Taxes by State.

Great Advisor Network

4.7 Stars


  • Finding an advisor near you
  • No-fee options

Visit Site

New Mexico Tax Rates

State Sales Tax5%
Avg State/Local Sales Tax7.84%
Gas Tax$0.17 per gallon
Diesel Tax$0.21 per gallon
Cigarette Tax$2.00 per pack
Income Tax5.9%
Effective Tax Rate4.91%
Property Tax0.80%
Social Security TaxPartial
Medical/Dental DeductionFederal Amount
Federal Income Tax DeductionNone
Retirement TaxYes
State Taxes in New Mexico

New Mexico State Taxes Explained

New Mexico Sales Tax

New Mexico’s 5.125% state levy covers most services except prescription drugs. Motor vehicles are taxable under a special 4% excise tax. Localities can add as much as 4.313%.

New Mexico Income Taxes

New Mexico’s max income tax rate is 5.9%, but residents over 100 are exempt.

New Mexico Property Taxes

New Mexico’s effective property tax rate is 0.80%. The median residential property value of $171,400 comes with a $1,371 tax bill.

The New Mexico Property Tax Rebate is available for residents age 65 and older. This rebate is for homeowners and renters with a modified gross income of $24,000 or less.

New Mexico Retirement Taxes

New Mexico taxes Social Security benefits, pensions and retirement accounts, though most seniors are eligible for a Social Security exemption: single taxpayers with less than $100,000 in income, married couples filing jointly, surviving spouses and heads of household with under $150,000 in income, and to married couples filing separately with under $75,000 in income don’t pay a tax. Taxpayers 65 years of age or older may be eligible for an income tax deduction of up to $8,000, depending on income level. Residents who are at least 100 years of age and who are not dependents of other taxpayers do not pay New Mexico personal income tax. Military pay is also taxable.

New Mexico residents aged 65 or older can take an income tax exemption of up to $3,000 for medical expenses for the taxpayer, spouse or dependents. The expenses must exceed $28,000 and be out-of-pocket expenses. An additional refundable credit of up to $2,800 for unreimbursed or uncompensated medical expenses can be combined with the exemption.

New Mexico Estate and Inheritance Taxes

There is no inheritance tax or estate tax in New Mexico.

For further information, visit the New Mexico Taxation and Revenue Department site.

Advertising Disclosure

We may earn money from our partners when you click a link, complete a form or call a phone number.

We believe everyone deserves to make thoughtful, informed purchase decisions. As a result, we provide our buyers guides and local guides free for consumers. We may receive compensation from our partners. However, Retirement Living independently researches companies, and the compensation we receive does not affect the analysis of our staff. Retirement Living will not include companies on our guides that do not meet our quality standards. The compensation we receive from our partners may impact how and where companies appear on our site, including the order in which they appear. As an Amazon Associate Retirement Living earns from qualifying purchases.

Retirement Living independently researches companies, and we use editorial discretion to award companies with special recognition (i.e. Great Value) based on our staff’s judgment. We do this to help you identify companies that will meet your specific buying needs, and we do not receive compensation for these designations.

Get Insider Access

Get special offers, advice and tips from Retirement Living delivered to your inbox.

Get Insider Access

Get special offers, advice and tips from Retirement Living delivered to your inbox.