nm-income-tax

New Mexico Individual Income Tax Skill — Self-Employed / Sole Proprietor

Scope. This skill covers New Mexico Form PIT-1 (Personal Income Tax Return) for full-year NM residents who are sole proprietors or single-member LLC owners. Tax year 2025 (returns filed in 2026). New Mexico uses a six-bracket graduated rate structure ranging from 1.5% to 5.9%, restructured under HB 252 effective 2025.

Quality tier. Q3 — AI-drafted, not independently verified. All outputs must be reviewed by a qualified tax professional before filing.

Section 1: Metadata

Metadata table

Field	Value
Tax type	Individual income tax (Personal Income Tax)
Jurisdiction	New Mexico (US-NM)
Tax year	2025 (filed 2026)
Primary form	Form PIT-1
Supporting schedules	Schedule PIT-B (Nonresident/Part-year), Schedule PIT-CR (Credits), Schedule PIT-ADJ (Adjustments)
Tax structure	Graduated (6 brackets)
Rate range	1.5% – 5.9%
Filing deadline	April 15, 2026
Extension deadline	October 15, 2026 (automatic with federal extension)
Tax authority	New Mexico Taxation and Revenue Department
Website	https://www.tax.newmexico.gov
Statute	N.M. Stat. Ann. §7-2-7 (Income Tax Act)

Sources:

• NM Taxation and Revenue Department, Personal Income Tax: https://www.tax.newmexico.gov/individuals/personal-income-tax-information-overview/
• HB 252 (2024 omnibus tax bill — restructured brackets effective 2025)
• EY Tax News: "New Mexico governor signs omnibus tax bill" (2024-0722)
• N.M. Stat. Ann. §7-2-7 (rate schedule)

Section 2: Quick reference — rates and thresholds

Tax brackets — Single / Estates and trusts (TY 2025)

Tax brackets — Single / Estates and trusts (TY 2025)

Taxable income over	But not over	Rate	Tax on lower amount
$0	$5,500	1.5%	$0
$5,500	$16,500	3.2%	$82.50
$16,500	$33,500	4.3%	$434.50
$33,500	$66,500	4.7%	$1,165.50
$66,500	$210,000	4.9%	$2,716.50
$210,000	—	5.9%	$9,748

Tax brackets — Married filing jointly / Head of household / Qualifying surviving spouse (TY 2025)

Tax brackets — MFJ / HOH / QSS (TY 2025)

Taxable income over	But not over	Rate	Tax on lower amount
$0	$8,000	1.5%	$0
$8,000	$25,000	3.2%	$120
$25,000	$50,000	4.3%	$664
$50,000	$100,000	4.7%	$1,739
$100,000	$315,000	4.9%	$4,089
$315,000	—	5.9%	$14,624

Tax brackets — Married filing separately (TY 2025)

Tax brackets — Married filing separately (TY 2025)

Taxable income over	But not over	Rate	Tax on lower amount
$0	$4,000	1.5%	$0
$4,000	$12,500	3.2%	$60
$12,500	$25,000	4.3%	$332
$25,000	$50,000	4.7%	$869.50
$50,000	$157,500	4.9%	$2,044.50
$157,500	—	5.9%	$7,312

Standard deduction

New Mexico follows the federal standard deduction amounts (NM conforms to federal for this purpose).

Standard deduction (TY 2025)

Filing status	Standard deduction (TY 2025)
Single	$15,000 (federal amount — verify)
Married filing jointly	$30,000 (federal amount — verify)
Head of household	$22,500 (federal amount — verify)

Low-and-middle-income exemption

• Low-and-middle-income exemption — New Mexico offers a low-and-middle-income exemption of up to $2,500 per qualified exemption, based on adjusted gross income. All taxpayers (residents, part-year residents, nonresidents) may claim this exemption.

Local income tax

• Local income tax — New Mexico does not permit local income taxes.

Section 3: How this skill works with the federal return

New Mexico taxable income starts with federal adjusted gross income (FAGI) from federal Form 1040, Line 11.

1. Start with federal AGI → PIT-1
2. Add NM additions — items NM adds back
3. Subtract NM subtractions — items NM excludes
4. Subtract NM exemptions (low-and-middle-income exemption, blind/aged exemptions)
5. Subtract standard or itemized deductions (NM follows federal amounts)
6. Result = NM taxable income
7. Apply the graduated rate schedule → NM tax
8. Apply credits and rebates (Schedule PIT-CR) → final tax due or refund

Key addition modifications

Key addition modifications

Addition	Description
Lump-sum distributions	Certain lump-sum distributions not included in federal AGI
NM income not in federal AGI	Income taxable by NM but excluded from federal return

Key subtraction modifications

Key subtraction modifications

Subtraction	Description
US government bond interest	Interest from US Treasury obligations
Social Security	NM does not tax Social Security benefits
Military retirement pay	Exempt for certain qualifying individuals
Age 65+ income exemption	Up to $8,000 for 65+ with AGI under $51,000 (single) or $36,667 (MFJ per spouse)

Section 4: Self-employed specific rules

Self-employment income flow

• Self-employment income flow — Schedule C net profit flows into federal AGI, which is the starting point for NM. NM follows the federal self-employment tax deduction (deductible half of SE tax) through federal AGI.

Estimated tax

• Estimated tax threshold — NM requires estimated tax payments if you expect to owe $1,000 or more after subtracting withholding and credits.

Estimated tax installment due dates

Installment	Due date
1st quarter	April 15
2nd quarter	June 15
3rd quarter	September 15
4th quarter	January 15 (following year)

Form PIT-ES is used for estimated tax payments.

Gross Receipts Tax (GRT) interaction

• GRT interaction — Self-employed taxpayers in NM are also subject to the Gross Receipts Tax (GRT), which is NM's equivalent of a sales/use tax but is imposed on the seller's gross receipts. Unlike a traditional sales tax, the GRT is imposed on the business (not the buyer), though it is commonly passed through to customers. - GRT applies to most services as well as goods (unlike most state sales taxes). - Rates vary by location (combined state + local: approximately 5.0% to 9.4375%). - Self-employed service providers must register for and collect/remit GRT. - GRT paid is deductible as a business expense on the federal Schedule C.

Working Families Tax Credit (NM EIC)

• NM Working Families Tax Credit — NM offers a refundable earned income credit equal to 25% of the federal Earned Income Credit (EIC) for TY 2025. This is particularly valuable for lower-income self-employed taxpayers.

Section 5: Tier 1 rules — deterministic

• NM-T1-01 — NM taxable income = federal AGI ± NM modifications − exemptions − deductions (N.M. Stat. Ann. §7-2-2)
• NM-T1-02 — Tax computed using 6-bracket schedule: 1.5%–5.9% (TY 2025) (N.M. Stat. Ann. §7-2-7; HB 252)
• NM-T1-03 — Starting point is federal AGI (Form 1040, Line 11) (N.M. Stat. Ann. §7-2-2)
• NM-T1-04 — Social Security benefits fully exempt (N.M. Stat. Ann. §7-2-2(S))
• NM-T1-05 — Low-and-middle-income exemption: up to $2,500 per qualified exemption (N.M. Stat. Ann. §7-2-5.6)
• NM-T1-06 — NM Working Families Tax Credit = 25% of federal EIC (refundable) (N.M. Stat. Ann. §7-2-18.16)
• NM-T1-07 — Estimated tax required if expected liability ≥ $1,000 (N.M. Stat. Ann. §7-2-12.2)
• NM-T1-08 — NM follows federal standard deduction amounts (N.M. Stat. Ann. §7-2-2)

Section 6: Tier 2 rules — requires judgment

• NM-T2-01 — Multi-state income: Taxpayer has income from another state (NM taxes worldwide income of residents. Credit for taxes paid to other states available on Schedule PIT-CR.)
• NM-T2-02 — GRT vs. income tax interaction (GRT is a separate tax on gross receipts, not a credit against income tax. GRT paid is deductible as a business expense on federal Schedule C, which flows through to NM.)
• NM-T2-03 — Technology jobs tax credit (NM offers credits for qualifying technology businesses. Requires certification.)
• NM-T2-04 — Angel investment credit (NM allows credits for qualified investments in NM small businesses. Requires approval from NM Economic Development Department.)
• NM-T2-05 — Federal IRC conformity (NM's conformity with the IRC should be verified for recent federal changes. NM generally has rolling conformity but may decouple from specific provisions.)
• NM-T2-06 — Community property (New Mexico IS a community property state. MFS returns require community property income allocation.)

Section 7: Supplier pattern library

Supplier pattern library

Input needed	Where to find it
Federal AGI	Federal Form 1040, Line 11
NM additions	PIT-1 / Schedule PIT-ADJ
NM subtractions	PIT-1 / Schedule PIT-ADJ
Standard/itemized deduction	Federal amounts (NM conforms)
Low-and-middle-income exemption	Based on AGI and number of exemptions
Tax credits and rebates	Schedule PIT-CR
Estimated tax payments	PIT-ES records
NM withholding	W-2 Box 17 / 1099 NM withholding amounts
Federal EIC amount	Federal Schedule EIC / Form 1040 (for NM WFTC calculation)

Section 8: Form mapping

Form PIT-1 line mapping

Form PIT-1 Line	Description	Source
Line 7	Federal adjusted gross income	Federal 1040, Line 11
Line 8	NM additions	Schedule PIT-ADJ
Line 10	NM subtractions	Schedule PIT-ADJ
Line 13	NM exemptions (low-and-middle-income, blind, aged)	Computed
Line 15	Standard or itemized deduction	Federal amount
Line 17	NM taxable income	Computed
Line 18	NM income tax	From rate schedule
Line 21	Credits and rebates	Schedule PIT-CR
Line 25	NM withholding	W-2s / 1099s
Line 26	Estimated tax payments	PIT-ES payments
Line 31	Amount owed or refund	Computed

Section 9: Refusal catalogue

• R-NM-01 — Part-year or nonresident ("NM part-year and nonresident returns require Schedule PIT-B. This is outside the scope of this skill.")
• R-NM-02 — Corporate return ("This skill covers personal income tax only (Form PIT-1). Corporate income tax (CIT) is not covered.")
• R-NM-03 — Fiduciary return ("NM fiduciary returns (Form FID-1) are not covered by this skill.")
• R-NM-04 — Amended return ("NM amended returns (amended PIT-1) are not covered.")
• R-NM-05 — GRT computation ("NM Gross Receipts Tax is a separate tax. See nm-sales-tax.md for GRT details.")
• R-NM-06 — Oil and gas taxation ("NM oil, gas, and mineral taxation (severance taxes, conservation taxes) requires specialist review.")

Disclaimer

This skill and its outputs are provided for informational and computational purposes only and do not constitute tax, legal, or financial advice. Open Accountants and its contributors accept no liability for any errors, omissions, or outcomes arising from the use of this skill. All outputs must be reviewed and signed off by a qualified professional before filing or acting upon.

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