New Mexico State Income Tax
New Mexico has a fairly progressive income tax. It taxes ordinary income – the money you earn from your job or the profits of your small business – at different rates depending on how much you make.
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The state income tax in New Mexico is a progressive tax, meaning the tax rate you pay depends on your taxable income. The rates range from 1.70% to 5.90%.. The state also has several refundable credits to help low-income families pay their taxes. These refundable credits include the Working Families Tax Credit, the Earned Income Credit, and the Child and Dependent Care Credit. The NM income tax is levied on ordinary income, which includes your paycheck from your job and profits from your small business. Other taxable income types include investment income, capital gains, and retirement account distributions. New Mexico does not have an estate or inheritance tax.
Who Must Pay New Mexico State Income Tax?
In New Mexico, income taxes are imposed on ordinary individuals. Ordinary income is typically the money you get from your job, but it can also include things like dividends, interest, and royalties. Unlike other types of income, such as long-term capital gains or qualified dividends, ordinary income does not receive special tax treatment.
If you’re worried about getting hit with a large tax bill come April, you can have your employer withhold a small amount of state income tax from each paycheck. This will reduce the size of each check and spread your tax burden over the course of the year. The state also collects excise taxes on alcohol, cigarettes, and gasoline.
New Mexico State Deductions and Credits
The state also has a wide range of deductions and credits, including a special tax exemption for land gifts. And it taxes tobacco products at a rate of $2 per pack, which is about the average in the country. In addition, the state imposes an excise tax on beer and wine and collects a tax on cigarette and alcohol manufacturers. It’s important to remember that state taxes tell only part of the story. A financial advisor can help you understand the full picture. Your state’s tax environment may differ from the one in another, but you can take steps to prepare for what’s ahead.
How to Pay New Mexico State Income Tax?
One way to pay New Mexico state income tax is to have your employer withhold a certain amount from each paycheck. This will spread your tax burden over the year, reducing your chances of being hit with a large bill in April.
Another way to pay New Mexico state income tax is by making estimated payments throughout the year. This is a good idea for people who expect to owe more than $500 in taxes this year. You can make these payments through Form PIT-ES or use the IRS’s Estimated Tax Payment Calculator to determine how much to pay each quarter.
