New Mexico Hourly Paycheck and Payroll Calculator

New Mexico Hourly Paycheck Calculator

New Mexico has enchanted people for centuries. And what’s not to love? The beautiful Four Corners area, the red sand deserts, and high snow-capped mountains offer something for everyone.As a business owner in New Mexico, you may be enchanted with its natural beauty, but you may be far less delighted with its payroll taxes. We’ve assembled this guide to help you navigate the payroll tax maze so you can get back to being enchanted.

New Mexico payroll taxes

Here’s what you need to know about withholding payroll taxes in New Mexico.

• New Mexico payroll taxes start with employees filling out Form W-4. This information helps you determine how much you should withhold.

• If an employee does not complete this form, you will need to withhold tax as though no exemptions were claimed.

• Employees need to update Form W-4 in case of life events (such as marriage, divorce, birth or adoption of a child, etc.) which may impact their taxes.

• The personal income tax rate in New Mexico is 1.70%–5.90%.

• New Mexico does not have reciprocity with other states.

Additional New Mexico forms

In addition to Form W-4 mentioned above, New Mexico employers also need to file the following forms:

1. Combined Report Form (CRS-1)*

2. Annual Withholding Form (RPD-41072)

3. Wage and Tax Statement (State W2)

4. Employer's Quarterly Wage and Contribution Report (ES-903A)

5. Workers' Compensation Fee Form (WC-1)

6. NM New Hire Report

New Mexico unemployment tax rate

New Mexico requires most employers to pay unemployment insurance tax to help compensate workers who are out of work through no fault of their own.

• Employers pay New Mexico unemployment tax on the first $30,100 of an employee’s wages.

• New employers in the agriculture industry pay at a rate of 1.06%.

• New employers in other industries pay at a rate of 1.0%*.

• Experienced employers pay at a rate of 0.33%–6.4%.

• For instructions on how to pay the unemployment tax in New Mexico (due quarterly), see the Unemployment Insurance Tax Information webpage.

Paying New Mexico taxes

Here’s what you need to know about paying New Mexico taxes:

• How often employers pay depends on the amount of tax you withhold in a year.

• New Mexico’s payment frequencies are: monthly, quarterly, or semi-annually based on the classification assigned to you when you register your business.

New Mexico minimum wage

In 2023, the minimum wage in New Mexico is $12.00 per hour.

New Mexico overtime pay

Because New Mexico doesn’t have any state law governing overtime pay, the federal rules under the Fair Labor Standards Act apply. Generally speaking, hourly employees are to be paid time-and-a-half for all hours worked over 40 hours in a week.

Workers’ Compensation

Requirements to obtain Workers' Compensation vary by state. This table outlines some of these requirements. If you determine that your company is required to purchase Workers' Compensation insurance in your state, learn how to sign up for this insurance with Gusto. Sometimes, companies get a request for a workers' comp audit—head to this article and click the workers’ comp audit reports dropdown for more information.

New hires

Employers in New Mexico need to report new employees.

• New hires must be reported to the New Mexico New Hire Directory.

• New hires must be reported within 20 days of their first day of work.

Payroll stubs

You must provide a pay stub to every employee that includes:

1. Company’s legal name and address

2. Employee’s name and last four digits of their Social Security number

3. Pay period beginning and end dates

4. Total hours worked

5. Rate of pay

6. Gross wages

7. The amount and reason for any deduction

Final paychecks

Employers must pay final wages to employees within a certain timeframe, depending on the circumstances for leaving.

• If a worker voluntarily resigns, you're required to pay them on or before the company's next regular payday.

• For layoffs and involuntary terminations, you're required to pay them within five days of their last day.

Time off

New Mexico law requires employers to provide the following types of time off to employees.

• Jury duty

• Voting leave: In some circumstances, employers are obligated to provide up to two hours off.

• Family & parental leave

• Sick leave is required of all employers, except companies in Bernalillo County.

• Domestic violence leave applies under the domestic abuse law and under the paid sick leave law.

Federal payroll taxes

In addition to New Mexico-specific taxes, both you and your employees will pay a variety of federal payroll taxes. Check out the breakdown below.

Federal income tax

Unless they are exempt, your employees will pay federal income tax.

• You must withhold federal income tax from employees’ pay, unless they are exempt.

• Each employee’s Form W-4 will differ based on their filing status and dependents, among other details—so the amount of income tax to be withheld will vary.

• Form W-4 does not need to be sent to the IRS, but should be kept for your records.

FICA

Both you and your employees will pay Federal Insurance Contributions Act, or FICA tax.

• FICA is made up of the Medicare tax and the Social Security tax.

• In 2023, the Social Security tax requires employers and employees to each contribute 6.2% of wages up to $2,600.

• The Medicare tax requires employers and employees to each contribute 1.45% of all wages.

• See the IRS webpage for details, like maximum thresholds.

FUTA

Like the state, the federal government also has an unemployment tax, called FUTA, which is paid by employers.

• FUTA is an annual tax an employer pays on the first $7,000 of each employee’s wages.

• The FUTA rate for 2023 is 6.0%, but many employers are able to pay less, for instance, up to 5.4% each year due to tax credits.

• Most employers will pay this tax annually with Form 940. But larger employers with more than $500 in tax due will have to pay quarterly.

Additional Medicare tax

The Additional Medicare tax is paid by employees. Here’s what you should know:

• For employees who earn over $200,000 per year, 0.9% of earnings will need to be withheld for the Additional Medicare tax.

• Whether or not your employee owes this tax may depend on their filing status.

Paying federal taxes

How often you’ll pay federal payroll taxes depends on how much you owe.

• Semi-weekly or monthly payments are required for federal withholding, Additional Medicare, and FICA taxes. And every quarter, a summary payroll tax return is due on Form 941, Employer’s Quarterly Federal Tax Return.

• Quarterly or annual payments are required for federal unemployment tax. Most employers will pay annually, but quarterly payments are necessary if you owe more than $500. Each time you make a payment, you’ll need to file a payroll tax return on Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return.

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We’re here to help

If you don’t love manual number crunching and payroll taxes sound overwhelming to you, take advantage of Gusto’s full-service payroll options or use an experienced accountant to help you with the process.