New Mexico pay stubs: state taxes and withholding
New Mexico paycheck withholding: graduated income tax from 1.5% to 5.9% for 2026, the small workers' comp fee, and federal payroll taxes.
Last reviewed
Rates on this page are for the 2026 tax year and are reviewed every January.
State income tax
New Mexico taxes wages under graduated rates. For 2026 the rates run from 1.5% on the lowest bracket to 5.9% at the top, under the bracket structure that took effect in 2025. Employers use the Taxation and Revenue Department's current withholding tables. From 2026, all New Mexico employers must file and pay withholding electronically, which is worth knowing if you run payroll yourself.
The workers' compensation fee
Most people don't expect this one. New Mexico charges a small workers' compensation fee for each covered employee on the payroll on the last day of each quarter. It is separate from workers' compensation insurance, and the cost is split:
- The employee pays a small quarterly share, deducted from pay.
- The employer pays its own larger share on top.
Because it's charged quarterly, the deduction usually appears on just one paycheck per quarter. Details are on the Taxation and Revenue Department's workers' compensation page.
Other state payroll deductions
New Mexico has no state disability insurance and no paid family leave payroll contribution. State unemployment insurance is paid by employers.
Local taxes
New Mexico cities and counties do not tax wages. Gross receipts tax is a business tax and isn't withheld from paychecks.
Federal withholding still applies
- Federal income tax, based on the employee's Form W-4
- Social Security at 6.2% of wages up to the annual Social Security wage base
- Medicare at 1.45%, plus an additional 0.9% on wages above $200,000
Creating a New Mexico pay stub with PayStubNest
Use the stub creator to enter hourly pay and hours or a salary, then choose New Mexico. The calculator applies federal and state withholding and keeps year-to-date totals running. Add the workers' compensation fee as a separate deduction on the paycheck where you take it. Exact figures depend on pay, pay frequency, W-4 choices, deductions and year-to-date totals, and PayStubNest calculates them for you automatically. Previews are free. You pay only for downloads.
Record-keeping tip
Choose which paycheck each quarter carries the workers' comp fee, such as the last one of the quarter, and keep to it. Consistent timing makes quarterly reconciliation much easier. Our guides cover recurring and occasional deductions.