New Mexico has a graduated state individual income tax, with rates ranging from 1.50 percent to 5.90 percent. New Mexico has a flat 5.90 percent corporate income tax rate, a 4.88 percent state gross receipts tax rate, and an average combined state and local rate of 7.67 percent. New Mexico has a 0.63 percent effective property tax rate on owner-occupied housing value. New Mexico does not have an estate tax or inheritance tax. New Mexico’s gas tax is 18.88 cents per gallon, and its cigarette excise tax is $2.00 per pack of 20 cigarettes.
New Mexico raises tax revenue primarily through other taxes (37.4 percent of total state and local tax revenue), general sales taxes (32.5 percent), and individual income taxes (14.0 percent). New Mexico collects $8,953 in state and local tax collections per capita, carries $6,281 in state and local debt per capita, and has a 68 percent funded ratio of public pension plans. New Mexico’s tax system ranks 28th overall on the 2026 State Tax Competitiveness Index.
Each state’s tax code is a multifaceted system with many moving parts, and New Mexico is no exception. Use the tabs below to compare New Mexico taxes with other states and to see how New Mexico raises tax revenue. You can also browse our tax maps, which are compiled from our annual publication, Facts & Figures 2026: How Does Your State Compare?
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The State Tax Competitiveness Index enables policymakers, taxpayers, and business leaders to gauge how their states’ tax systems compare. While there are many ways to show how much state governments collect in taxes, the Index evaluates how well states structure their tax systems and provides a road map for improvement.
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Facts & Figures serves as a one-stop state tax data resource that compares all 50 states on over 40 measures of tax rates, collections, burdens, and more.
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Individual income taxes are a major source of state government revenue, accounting for more than a third of state tax collections. How do income taxes compare in your state?
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Retail sales taxes are an essential part of most states’ revenue toolkits, responsible for nearly a quarter of combined state and local tax collections.
18 min read
Forty-four states levy a corporate income tax, with top rates ranging from a 2 percent flat rate in North Carolina to an 11.5 percent top marginal rate in New Jersey. Four states—Georgia, Nebraska, North Carolina, and Pennsylvania—reduced their corporate income tax rates effective January 1, 2026.
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Property taxes are the primary tool for financing local governments. While no taxpayers in high-tax jurisdictions will be celebrating their yearly payments, property taxes are largely rooted in the benefit principle of taxation: the people paying the property tax bills are most often the ones benefiting from the services.
9 min read
However well-intended they may be, sales tax holidays remain the same as they always have been—ineffective and inefficient.
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Policymakers are increasingly considering taxes on data processing and other businesses’ digital services, but these taxes increase costs at many stages of the production process for virtually all businesses, not just tech-oriented businesses.
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The five states with the highest average combined state and local sales tax rates are Louisiana (10.13 percent), Tennessee (9.61 percent), Washington (9.57 percent), Arkansas (9.48 percent), and Alabama (9.46 percent).
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Whether a sommelier or a casual enjoyer, wine drinkers may not be aware of just how much they are paying in taxes to uncork their drink of choice.
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In the United States, taxes are the single most expensive ingredient in beer. The tax burden accounts for more of the final price of beer than labor and materials combined—the many different layers of applicable taxes combining to total as much as 40.8 percent of the retail price.
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Policies that increase the tax burden on high earners makes states less competitive, increase revenue volatility, discourage investment, and risk accelerating outmigration of talent and capital. Many top-earners are already leaving high-tax states for Florida, North Carolina, and other low-tax jurisdictions.
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The significant disparity in tax rates across states underscores the complex tax and regulatory environment governing distilled spirits.
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Tax collections vary widely by state, making per capita collections figures—a measure of collections per person—especially useful, as they allow comparisons across differences in tax rates and bases, economic capacities, and policy decisions that impact the size and scope of government.
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Rental cars are some of the most heavily taxed transactions in the US. Rather than levying additional taxes on rental cars by trying to export the tax burden to nonresidents, municipalities should enact principled, neutral transportation tax policy that is unlikely to discourage visitors, tourists, and other economic activity.
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These debates are often framed in terms of fairness. Raise taxes on a few to provide benefits for most, the thinking goes. But in policy, the more important question should focus on mechanics: will this change achieve its stated goal?
