The most significant is the exemption for food. The gross receipts tax applies to goods and services, with some exceptions. The table below shows state, county and city rates in every county in New Mexico, as well as some of the largest cities. The statewide gross receipts tax rate is 5.00%, while city and county taxes can add up to a total of 7.72%. This is often passed on to consumers by either adding it to the price or explicitly spelling it out on the invoice. Businesses are charged a gross receipts tax, which is collected at the state, county and city levels. New Mexico doesn’t technically have a sales tax. That deduction is equal to up to 40% of the total income from net capital gains or $1,000 of the net capital gains reported, whichever is larger. While capital gains are taxable as personal income in New Mexico, the state allows taxpayers with income from capital gains to claim a special tax deduction. The available rebates and credits include the low-income comprehensive tax rebate (available to earners making less than $36,000 per year), the child day care credit, the refundable medical care credit (for taxpayers age 65 or older), the special needs adopted child tax credit and the working families tax credit. After an initial tax amount is determined, there are certain rebates and credits that can be claimed to reduce the amount of taxes owed. Using those rules for exemptions and deductions, New Mexico taxpayers can determine their taxable income and calculate their New Mexico income tax based on the rates above. For married persons filing jointly or heads of household, the cutoff is $55,000. For married persons filing separately, the cutoff is $27,500. For single filers, anyone earning $36,667 or less may claim this exemption. In addition to that federal exemption, low- and middle-income earners may claim a $2,500 exemption for each federal exemption claimed. State and local taxes are not deductible in New Mexico, so any filers claiming that itemized deduction on their federal tax return must add it back to their state taxable income.ĭeduction amounts for personal exemptions are suspended for tax years 2018 through 2025 by the 2017 federal Tax Cuts and Jobs Act. For tax year 2022, that means single filers can claim a standard deduction of $12,950 and joint filers can claim a standard deduction of $25,900. Deductions, both itemized and standard, match the federal deductions. Rules for filing taxes in New Mexico are very similar to the federal tax rules. As shown in the table below, there are four income brackets, with higher tax rates applying to higher earnings. New Mexico’s income tax system is modeled after the federal income tax, though it has fewer income tax brackets and significantly lower rates. If you’re ready to find an advisor who can help you achieve your financial goals, get started now. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. Below we will take a closer look at the rules and exceptions for each of these taxes individually, as well as a few others such as the gas and cigarette taxes.Ī financial advisor can help you understand how taxes fit into your overall financial goals. Of course, the impact of these taxes varies depending on the financial circumstance of each taxpayer. New Mexico ranks below the national average for each of these taxes. Taxpayers in the Land of Enchantment pay three primary forms of state and local taxes: a state income tax, local property taxes and state and local gross receipts taxes. Gas tax: 17.00 cents per gallon of regular gasoline, 21.00 cents per gallon of diesel.Property tax: 0.73% average effective rate.
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