Guide to filing a New Mexico state tax return

Brightly colored hot air balloons rise above the Albuquerque landscape during the annual festival in New Mexico, where residents must consider if they must file a New Mexico state tax return. Image:

In a Nutshell

With the election of a Democratic governor, New Mexico’s tax code may be headed for big changes in the near future, as one party now controls the state’s executive branch and both legislative chambers. For now, New Mexicans are working with a complex tax code that has five tax rates and numerous tax breaks.

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This article was fact-checked by our editors and reviewed by CPA candidate Janet Murphy, senior product specialist with Credit Karma Tax®.

Whether you’re a retired Santa Fe artist, a Chaves County cattleman, or a balloon pilot who takes part in the annual hot air balloon fiesta in Albuquerque, if you earn money from a New Mexico source, you probably need to file a New Mexico state tax return.

Here’s some information to help you file your taxes in the Land of Enchantment.

The basics of New Mexico state tax

If you have to file a federal income tax return, and you lived in New Mexico or received (or lost) any income from businesses or other organizations in the state, you’ll probably need to file a New Mexico state personal income tax return.

Taxing body

To file and pay your New Mexico state taxes, you’ll be working with the New Mexico Taxation and Revenue Department. Here is the agency’s contact information.

New Mexico Taxation & Revenue Department
1100 South St. Francis Drive
Santa Fe, NM 87504

If you prefer to contact the department by email, you can send a message on its Contact Us page. There are also five district field offices that operate Monday through Friday, 8 a.m. to 5 p.m. Check out a list of the offices, with their phone numbers and addresses, here.

Filing and payment deadline

New Mexico state tax returns are typically due on April 15. If the 15th falls on a weekend or holiday, the deadline is delayed to the next business day.

Filing statuses

New Mexico uses the same filing statuses as the federal income tax system. In fact, you must use the same filing status on your New Mexico state tax return as you did on your federal return. Just as a reminder, those filing statuses are …

  • Single
  • Married filing jointly
  • Married filing separately
  • Head of household
  • Qualifying widow(er) with dependent child

New Mexico income tax rates

New Mexico has five tax brackets, with tax rates of 0%, 1.7%, 3.2%, 4.7% and 4.9%. Your marginal tax rate will depend on your filing status and income.

Learn how your federal tax filing status affects your tax bill

New Mexico deductions and credits to know

New Mexico offers a lot of potential tax breaks, especially to lower-income people and seniors.

Standard deduction

New Mexico generally follows federal tax laws for its standard deduction and personal exemptions. Because New Mexico is conforming to certain Tax Cuts and Jobs Act provisions for the 2018 tax year, individual New Mexico taxpayers will see their state personal exemptions suspended. Their standard deduction amounts will mirror the federal amounts.

  • $12,000 for single filers (as well as married filing separately)
  • $18,000 for heads of household
  • $24,000 for married couples filing jointly and qualifying widow(er)s

Itemized deductions

If you itemized deductions on your federal return, your New Mexico itemized deductions are basically the same — except you must add back all or part of the amount you deducted on your federal return for state and local taxes.

Exemptions and adjustments

Additionally, you may be able to make other income adjustments on your state return that could lower your state tax burden. For the 2018 tax year, these include the following:

  • The New Mexico low- and middle-income exemption
  • Medical care expense deduction
  • Deduction for federally taxable contributions (made by you or your employer) or qualified withdrawals for a New Mexico medical care savings account
  • Deduction for contributions to a New Mexico 529 college savings plan
  • Deduction for your pay, if you worked full-time for the armed forces (including the National Guard) or were on active duty
How might tax reform affect your 2018 federal income tax bill

New Mexico tax credits

The state offers multiple credits for taxpayers, including the following:

  • New Mexico child day care credit — This credit is only available to working parents making less than a certain income-threshold amount. It’s also not available to people who are on certain public assistance.
  • Refundable medical care credit for people 65 or older — This credit is available to seniors who spent $28,000 or more in unreimbursed and uncompensated medical bills during the year, either on themselves, their spouse or their dependents. The credit amount is $2,800 for joint filers ($1,400 for those married filing separately). The credit can be refundable, meaning if it reduces your tax obligation to zero, you can get the balance of the credit as a refund.
  • Special needs adopted child tax credit — Did you adopt a special needs child during the year? If so, the adoption agency should have given you a certificate that you’ll need to send in with your tax return to qualify for this credit. The credit is worth $1,200, or $600 for married-filing-separately couples.

How to file your New Mexico state tax return

The easiest, fastest and most secure way to file your return is to do it electronically. You have two options for electronic filing.

  • You can file your New Mexico state tax return at the same time as your federal tax return through the federal/state e-file program.
  • You can file it separately through the New Mexico Taxpayer Access site.

If you hire someone to prepare your taxes, chances are they’ll use one of these two options. Depending on your filing status in New Mexico, you can also prepare and file your federal and New Mexico state tax return for free with Credit Karma Tax®.

If you prefer to file a paper return, you can find and print copies of any required forms from this website.

You can mail your return to the following address:

New Mexico Taxation & Revenue Department
P.O. Box 25122
Santa Fe, NM 87504-5122

But take note: If you owe any taxes, you’ll need to mail the payment separately to this address:

New Mexico Taxation & Revenue Department
P.O. Box 8390
Santa Fe, NM 87504-8390

If you owe and can’t pay

The state of New Mexico does allow you to set up payment plans if you can’t afford to pay your tax bill in full by the due date. When you owe the state taxes, the Taxation and Revenue Department will try to contact you through mailed notices, phone calls and possibly even in-person visits from field agents. Once you’ve established contact with the department, you can request a payment plan.

You can either request a short-term payment plan that gives you 12 or fewer months to pay off your tax debt, or an installment agreement for up to 72 months. While the state won’t normally file a tax lien if you have a short-term payment plan, longer installment agreements do require liens or some form of security.

You’ll still owe a penalty of 2% of the amount due per month (up to a max of 20% of your entire bill) plus interest while your debt is outstanding. The state may require you to complete a financial assessment, or to show that you’ve applied for loans or credit to pay your tax bill and been denied before it will approve you for a payment plan.

Tracking your New Mexico tax refund

If you have your Social Security number or Individual Taxpayer Identification Number and the amount of your refund handy, you can track the status of your return on New Mexico’s Taxpayer Access Point website.

It generally takes six to eight weeks to process your return if you filed electronically, or eight to 12 weeks if you sent in a paper New Mexico state tax return.

Bottom line

The future of New Mexico’s tax code is unclear thanks to a changing political climate. Before you file your 2018 income tax return in 2019, be sure to read up on any changes in the state’s tax code that may occur between now and then.

A senior product specialist with Credit Karma Tax®, Janet Murphy is a CPA candidate with more than a decade in the tax industry. She’s worked as a tax analyst, tax product development manager and tax accountant. She has accounting degrees and certifications from Clemson University and the U.S. Career Institute. You can find her on LinkedIn.