+27 State Tax New Mexico Ideas

» Why the poor pay the highest tax rate in New Mexico—and one step toward a fix from www.nmvoices.org

Understanding the Basics of State Tax in New Mexico

Introduction

When it comes to paying taxes, most people focus on federal income taxes. However, state taxes are equally important and can significantly impact your finances. In this article, we will explore the basics of state tax in New Mexico, including what it is, who pays it, and how it is calculated.

What is State Tax?

State tax is a tax levied by individual states on income earned within their borders. In New Mexico, state tax is collected on all income earned by residents and non-residents who work in the state. This includes wages, salaries, tips, bonuses, and other forms of income.

Who Pays State Tax in New Mexico?

If you are a resident of New Mexico, you are required to pay state tax on all income earned both within and outside the state. Non-residents who earn income in New Mexico are also subject to state tax on that income.

How is State Tax Calculated in New Mexico?

The amount of state tax you owe in New Mexico depends on your taxable income, which is calculated by subtracting deductions and exemptions from your total income. The state uses a progressive tax system, which means that the more you earn, the higher your tax rate.

What are the Tax Rates in New Mexico?

As of 2023, the tax rates in New Mexico range from 1.7% to 5.9%. The tax rate you pay depends on your taxable income. For example, if you earn less than $5,500 per year, you will pay a tax rate of 1.7%. If you earn more than $16,000 per year, you will pay a tax rate of 5.9%.

Are There Any Deductions or Exemptions?

Yes, there are several deductions and exemptions that can reduce your taxable income and lower your state tax bill. Some of the most common deductions and exemptions in New Mexico include: - Standard deduction: $4,000 for single filers, $8,000 for married couples filing jointly - Personal exemption: $4,000 per person - Dependent exemption: $3,000 per dependent - Charitable contributions - Mortgage interest - Property taxes

When is State Tax Due?

State tax in New Mexico is due on April 15th of each year, the same as federal income tax. If you cannot file your taxes by the deadline, you can request an extension until October 15th. However, you will still need to pay any taxes owed by April 15th to avoid penalties and interest.

What Happens if You Don't Pay State Tax?

If you fail to pay state tax in New Mexico, you may face penalties and interest on the unpaid amount. The state can also take more severe measures, such as garnishing your wages or placing a lien on your property.

Conclusion

State tax is an important part of your overall tax bill, and understanding how it works can help you manage your finances more effectively. By knowing the basics of state tax in New Mexico, you can ensure that you are paying the correct amount and taking advantage of any deductions or exemptions available to you.

Share :