The Tax Foundation

Research Areas

New Mexico

The Facts on New Mexico’s Tax Climate

Here are some basic facts on New Mexico’s tax system and how it compares to other states:

Tax Freedom Day Arrives on April 12 in New Mexico
Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2008, New Mexico taxpayers had to work until April 12, ranking it 42nd highest in the nation. That is 11 days earlier than the national Tax Freedom Day (April 23). The Tax Freedom Days of neighboring states are: Utah, April 21 (ranked 17th), Arizona, April 20 (ranked 20th), Texas, April 12 (ranked 40th) Oklahoma, April 11th (ranked 43rd) and Colorado, April 23 (ranked 15th).

Tax Freedom Day has been projected using the most up-to-date economic and budget projections from official government agencies. However, Tax Foundation estimates of average state and local tax rates for 2008 will not be released until later this spring as we await more up-to-date data from various government agencies.
Full study of Tax Freedom Day, nationwide and in each state

New Mexico's State/Local Tax Burden Among Nation's Lowest in 2007
In the early nineties, New Mexico's tax burden was substantially above the national average. Since then the state has seen its figure fall significantly as individual incomes in the state have risen faster than state/local tax collections. Estimated at 9.8% of income, New Mexico's state/local tax burden percentage ranks 40th highest nationally, below the national average of 11.0%. New Mexico taxpayers pay $3,251 per-capita for state and local taxes, and state per capita income is $33,163.
New Mexico's State-Local Tax Burden, 1970-Present

New Mexico's 2008 Business Tax Climate Ranks 23rd
New Mexico ranks 23rd in the Tax Foundation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. Neighboring states ranked as follows: Utah (17th), Arizona (25th), Texas (8th), Oklahoma (19th) and Colorado (13th). 
50-State Comparison of Business Tax Climates (data only)
2008 State Business Tax Climate Index, Fifth Edition (full study)

New Mexico's Individual Income Tax System
New Mexico's personal income tax system consists of four brackets and a top rate of 5.3%, kicking in at an income level of $16,000. Among states levying personal income taxes, New Mexico's top rate is 32nd highest nationally. New Mexico's 2005 individual income tax collections were $564 per person, which ranked 37th highest nationally.
50-State Table of Individual Income Tax Rates
50-State Table of State Individual Income Tax Collections
50-State Table of State and Local Individual Income Tax Collections Per Capita

New Mexico's Corporate Income Tax System
New Mexico's corporate tax structure consists of three brackets, with a top rate of 7.6% kicking in at $1,000,000 of net income. Among states levying corporate income taxes, this top tax rate ranks New Mexico 20th highest nationally. In 2006, state-level corporate tax collections (excluding local taxes) were $192.97 per capita, which ranked 11th highest nationally.
50-State Table of Corporate Income Tax Rates, 2000-2008
50-State Table of State and Local Corporate Income Tax Collections Per Capita and Per Household, 2005
50-State Table of State Corporate Income Tax Collections Per Capita, 2006

New Mexico Levies Sales Tax Slightly below National Median; Gasoline Taxes Comparatively Low
New Mexico levies a 5% general sales or use tax on consumers, which is slightly below the national median of 5.4 percent. State and local governments combined collect approximately $1,489 per capita in general sales taxes, ranking 9th highest nationally. New Mexico's gasoline tax stands at 18 cents per gallon and ranks 44th highest nationally. New Mexico's cigarette tax stands at $0.91 per pack of twenty, which ranks 28th highest nationally. The sales tax was adopted in 1933, the gasoline tax in 1919 and the cigarette tax in 1943.
50-State Table of Sales and Excise Tax Rates
50-State Table of State and Local General Sales and Gross Receipts Tax Collections Per Household and Per Capita, Fiscal Year 2005

New Mexico Property Taxes: Among the Lowest
New Mexico is one of the 37 states that collect property taxes at both the state and local levels. As in most states, local governments collect far more. New Mexico's localities collected $786,994,000 in property taxes in fiscal year 2004, which is the latest year the Census Bureau published state-by-state property tax collections. At the state level, New Mexico collected $52,779,000 in property taxes during FY 2002, making its combined state/local property taxes $840,068,000. That brings its per capita collection to $441, ranking 3rd lowest nationally.
State property tax collections per capita by state

Federal Tax Burdens and Expenditures: New Mexico Benefits More Than Any Other State
New Mexico taxpayers receive more federal funding per dollar of federal taxes paid than any other state. Per dollar of Federal tax collected in 2005, New Mexico citizens received approximately $2.03 in the way of federal spending. This represents an increase from 1995, when New Mexico received $1.85 per dollar of taxes in federal spending (also ranked highest). Neighboring states and the amount of federal spending received per dollar of federal taxes collected were: of Utah ($1.07), Arizona ($1.19), Texas ($0.94), Oklahoma ($1.36), and Colorado ($0.81).
Comparing the amount of federal taxes sent to Washington with the amount of federal spending coming back to the state

Articles from the Tax Foundation