Arizona vs New Mexico taxes

Same starting point, different rates

Neither state deducts a payroll levy or has a local income tax, and both subtract the federal standard deduction, $16,100 for a single filer, before charging anything. So the difference is simply what each charges on the rest.

Arizona charges a flat 2.5% on all of it. New Mexico charges 1.5% on the first $5,500 of taxable income, then 3.2%, 4.3% and 4.7%, and 4.9% from $66,500 up to $210,000, with 5.9% above. Lower earners in New Mexico also get an exemption of up to $2,500 a person, which is gone for a single filer above $36,667.

On $75,000 Arizona charges $1,473 and New Mexico $2,359, so a single filer keeps $887 more in Arizona.

New Mexico is lighter at the bottom

New Mexico’s lowest band, at 1.5%, and its exemption give it a slight edge on low pay: on $20,000 a single filer keeps $77 more there. The advantage is small and short-lived. Every New Mexico band after the first is above Arizona’s rate, and the exemption shrinks by 15 cents for every dollar of income above $20,000, so Arizona pulls ahead at about $32,500 for a single filer.

Couples get twice the federal deduction in both states, wider bands in New Mexico and a larger exemption there, so New Mexico stays level or slightly ahead for longer: Arizona pulls ahead of a couple filing jointly at about $53,500.

The gap above that

Once New Mexico’s exemption has gone, most of a middle or higher salary is taxed there at 4.7% or 4.9%, against Arizona’s 2.5%, so Arizona’s lead grows by more than two cents on each extra dollar: $1,472 on $100,000, $2,672 on $150,000 and $5,311 on $250,000. New Mexico’s top rate of 5.9% starts at $210,000 of taxable income, and on $500,000 Arizona keeps $13,811 more. For a couple filing jointly on $150,000 the gap is $2,016.

What the take-home figure does not count

New Mexico’s local variation is in its gross receipts tax, which falls on what you buy rather than what you earn; no sales or gross receipts tax is in these figures. Arizona does not tax Social Security and fully exempts military retirement pay, but taxes most other pensions at its flat rate; this page models wages only. New Mexico files from a lookup table below $100,000 of taxable income, so a real return can differ from the New Mexico figure here by a dollar or two.

Questions people ask

Do you take home more in Arizona or New Mexico on $75,000?

Arizona, by $887 a year, or $74 a month, for a single filer in 2026. That counts federal tax, Social Security, Medicare, state income tax and every state payroll deduction.

Is the difference the same at every salary?

No. The side that keeps more changes with the salary: $30,000: New Mexico by $28; $50,000: Arizona by $337; $75,000: Arizona by $887; $100,000: Arizona by $1,472; $150,000: Arizona by $2,672; $250,000: Arizona by $5,311.

Does either state have a payroll deduction or a local income tax?

Neither. Arizona and New Mexico both fund unemployment insurance from employers, and neither runs a disability or paid family leave program. No city or county in either state levies an income tax, so the figures hold in Phoenix and Tucson as they do in Albuquerque and Las Cruces.

What is New Mexico's low- and middle-income exemption?

An exemption for each person on the return, you, a spouse and any dependents, taken on top of the federal deduction. It shrinks as income rises, by 15 cents a dollar for a single filer and 10 cents a dollar each for a couple, and is gone at the state's published income ceilings. Arizona has nothing like it.

Has Arizona always had a flat tax?

No. Until 2021 Arizona had graduated rates rising to 4.5%. Legislation that year moved it to a single rate, and the flat 2.5% has applied since the 2023 tax year. New Mexico kept graduated rates, with its current schedule applying from the 2025 tax year.

What this comparison covers

Income tax and payroll deductions on wages: federal income tax, Social Security, Medicare, state income tax, every state payroll deduction. It does not compare sales tax, property tax, housing or the cost of living, which can outweigh the difference in take-home pay. Figures assume the standard deduction, no dependents and no pre-tax retirement contributions. See how we calculate.