Texas wins decisively on income tax — its constitutional ban on state income tax saves residents $4,418/year on a $100,000 salary compared to New Mexico’s progressive 1.7–5.9% rates. However, New Mexico’s property tax rate (0.67%) is dramatically lower than Texas’s (1.60%), saving homeowners $3,720/year on a $400,000 home. For wage earners and renters, Texas is significantly cheaper. For retirees with fixed incomes and high home equity, New Mexico’s property tax advantage partially offsets the income tax difference.

By Daniel, Founder of CountryTaxCalc

Daniel has spent 5+ years researching tax systems across 95+ countries and all US states to make tax comparison accessible to everyone. For corrections, contact us.

Last Updated: April 2026

The Big Picture

☀️ New Mexico

1.7–5.9%

Progressive

4 brackets; top 5.9% on income above $210,000 (single)

⭐ Texas

0%

No Income Tax

Constitutional prohibition on state income tax

Typical Annual Savings

At $100,000 income:

$4,418

That is $368/month back in your pocket!

Tax Savings by Income Level

IncomeNM TaxTX TaxSavings10-Year
$50,000 $1,893$0$1,893$18,930
$75,000 $3,118$0$3,118$31,180
$100,000 $4,418$0$4,418$44,180
$150,000 $7,383$0$7,383$73,830
$250,000 $13,543$0$13,543$135,430
$500,000 $28,043$0$28,043$280,430
💡

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New Mexico Pros and Cons

✅ Pros

  • Low property tax: New Mexico 0.67% vs Texas 1.60% saves $3,720/year on a $400k home
  • Social Security exemption: SS income fully exempt for single filers under $100k, joint under $150k
  • Lower cost of living: Albuquerque is 20–25% cheaper than Austin or Dallas overall
  • Mild, sunny climate: 300+ days of sunshine per year in Albuquerque and Santa Fe

❌ Cons

  • State income tax: 1.7–5.9% progressive costs $4,418 on $100k and $28,043 on $500k
  • Gross Receipts Tax: NM’s GRT (7.5–9.3%) is effectively a sales tax but applies to more goods and services
  • Smaller economy: New Mexico’s GDP and job market are far smaller than Texas
  • Higher poverty rate: NM ranks near last in income, education, and economic mobility

Texas Pros and Cons

✅ Pros

  • Zero income tax: constitutional prohibition saves $4,418/year on $100k, $28,043 on $500k
  • Massive economy: Texas has the 9th largest GDP in the world, with booming tech and energy sectors
  • No estate tax: Texas has no estate or inheritance tax
  • Lower sales tax than NM’s GRT: Texas 8.25% vs NM 7.5–9.3% Gross Receipts Tax

❌ Cons

  • High property tax: Texas 1.60% vs NM 0.67% costs $3,720 more/year on a $400k home
  • Extreme heat: Dallas and Houston regularly exceed 100°F in summer with high humidity
  • Electricity costs: Texas grid (ERCOT) can produce very high bills and has had major outages
  • No retirement income exemption: Texas’ zero rate is the exemption — but property taxes hit retirees hard

Frequently Asked Questions

Q: Does Texas really save $4,418 per year on a $100,000 salary vs New Mexico?

Yes, on earned income alone. New Mexico imposes progressive rates from 1.7% to 5.9%, resulting in approximately $4,418 state income tax on a $100,000 single-filer salary. Texas has no state income tax. However, Texas’s property tax rate (1.60%) vs New Mexico’s (0.67%) means Texas homeowners pay $3,720 more per year on a $400,000 home. If you own an expensive home in Texas, the property tax can erase a large portion of the income tax savings.

Q: What is New Mexico’s Gross Receipts Tax and how does it differ from sales tax?

New Mexico uses a Gross Receipts Tax (GRT) instead of a traditional sales tax. The combined state and local GRT ranges from 7.5% to 9.3% depending on municipality. Unlike most states’ sales taxes, the GRT applies to a broader range of transactions including many services, making it a heavier tax burden in practice. Texas’s state sales tax is capped at 8.25%. For most consumers, GRT and sales tax feel similar, but New Mexico’s GRT can hit more categories of spending.

Q: Is New Mexico or Texas better for retirement?

New Mexico has a meaningful retirement advantage for lower-income retirees: Social Security is fully exempt for single filers earning under $100,000 and joint filers under $150,000. Texas has no income tax at all, which also means zero tax on retirement income. Texas wins for high-income retirees. However, New Mexico’s much lower property tax (0.67% vs 1.60%) can save retirees $3,720+/year on a $400k home, which matters on a fixed income. Choose Texas for high retirement income; consider NM for low-income retirees with valuable property.

Q: Are people moving from New Mexico to Texas?

Yes, significant migration flows from New Mexico to Texas, primarily driven by Texas’s zero income tax, larger job market (Austin, Dallas, Houston), and higher wages. El Paso sits on the NM/TX border, making it a common relocation corridor. In recent years, Albuquerque to Austin and Albuquerque to San Antonio have been common migration paths. However, some Texans move to New Mexico for lower property taxes and a quieter lifestyle, particularly retirees settling in Santa Fe and Taos.

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