New Mexico Capital Gains Tax: 2026 Rules and Calculator
Selling a New Mexico business? 40% of up to $1,000,000 of the gain comes off before the 5.9% tax; other sales get almost no break since 2025. Here is what a New Mexico seller pays in 2026, layer by layer, and a calculator for your own sale.
Short answer: New Mexico taxes capital gains as ordinary income at up to 5.9%; from 2025 the 40% capital gains deduction is limited to gain on the sale of a New Mexico business, capped at $1,000,000 of gain, and other sales get a deduction of up to $2,500 (NMSA 7-2-34, 2024 HB 252). On top of that comes federal capital gains tax (0%, 15% or 20% for 2026 under IRS Rev. Proc. 2025-32, and up to 25% on building depreciation) and the 3.8% net investment income tax above $250,000 of income for married couples or $200,000 single (IRC 1411).
New Mexico capital gains tax calculator
Enter your sale: rental property, your home, land, a business, stock or collectibles. You get the 2026 tax in New Mexico (federal, the 3.8% tax and New Mexico tax) and the same sale spread over the years the buyer pays you. It runs in your browser on the same engine as our capital gains tax calculator.
You keep $2,307,845 after selling costs and tax. The tax is 25% of your gain.
Your gain
- Sale price less selling costs$2,910,000
- Less your basis$500,000
- Your taxable gain$2,410,000
- Long-term gain at 0%, 15% or 20%$2,410,000
The tax, line by line
- Federal income tax (incl. $24,860 AMT)$483,565
- Net investment income tax (3.8%)$0
- New Mexico tax$118,590
- Total tax$602,155
- You keep$2,307,845
Get the REAL numbers
Talk to capital gains expert Hans Goldstein, EA.
These are estimates. Have a qualified tax professional run your real numbers in a 15-minute scope call.
Why now: the closing date and how the buyer pays you are set before closing, and they decide how much New Mexico and federal tax this sale costs.
Book my 15-minute callThis is an estimate. Getting it right down to the tee takes your actual tax forms (returns, K-1s, depreciation schedules), a consult and a paid analysis. The first 15-minute scope call is free.
How New Mexico taxes capital gains in 2026
New Mexico taxes capital gains as ordinary income at up to 5.9%; from 2025 the 40% capital gains deduction is limited to gain on the sale of a New Mexico business, capped at $1,000,000 of gain, and other sales get a deduction of up to $2,500 (NMSA 7-2-34, 2024 HB 252).
- The 40% business deduction applies to the sale of a New Mexico business and is capped at $1,000,000 of gain, so at most $400,000 is deducted.
Selling New Mexico property while living elsewhere: New Mexico taxes a nonresident on gain from real estate and other property located in New Mexico, so selling New Mexico property from another state still means a New Mexico return.
Worked example (computed October 13, 2026)
A New Mexico business sale that uses the capped 40% deduction. A married couple filing jointly in New Mexico sells a business they work in for $3,000,000 with $90,000 of selling costs. Basis is $500,000, and other income is $180,000.
- Taxable gain: $2,410,000.
- All in one year (2026): $483,565 federal income tax, $0 net investment income tax and $118,590 New Mexico tax (4.9% of the gain): $602,155 in total, 25% of the gain.
- Spread over 10 years on a note: $446,814 of tax on the gain, so the seller keeps $155,341 more. Interest on the note is taxed separately.
What the calculator simplifies
It applies the rule above to the whole gain for one sale in 2026. It also leaves out local taxes unless named above, the alternative minimum tax effect of note interest, and equipment recapture on a business sale. Federal tables for later years carry the 2026 tables forward.
Spreading a New Mexico sale over several years
On an installment sale the gain is reported as the buyer pays you (IRC 453), so each year's slice can stay in lower federal brackets and under the 3.8% threshold. Building depreciation is reported first (Treas. Reg. 1.453-12), equipment recapture is taxed in the year of sale (IRC 453(i)), and notes over $5,000,000 owe the Section 453A interest charge. More on how it works: what a structured installment sale is.
Sources
- New Mexico Statutes 7-2-34
- IRS Rev. Proc. 2025-32: 2026 federal brackets.
- IRC 1(h) and IRC 1411: capital gain rates and the 3.8% tax (as in force October 2026).
What is the tax bill on your New Mexico sale going to be?
Send me the sale price and rough basis. Within one business day I'll email you the actual number and the Seller's Guide to §453. If it doesn't fit your deal, I'll tell you that plainly.
No retainer · no obligation. Hans Goldstein, a licensed insurance agent (CA Insurance License #4273294), will contact you and may discuss insurance products, including annuities.
Frequently asked
What is the capital gains tax rate in New Mexico for 2026?
New Mexico taxes capital gains as ordinary income at up to 5.9%; from 2025 the 40% capital gains deduction is limited to gain on the sale of a New Mexico business, capped at $1,000,000 of gain, and other sales get a deduction of up to $2,500 (NMSA 7-2-34, 2024 HB 252). Federal capital gains tax and the 3.8% net investment income tax come on top.
How much tax on a $3,000,000 sale in New Mexico?
In the example on this page, a married couple filing jointly selling a business they work in for $3,000,000 with a $2,410,000 taxable gain owes $602,155 in 2026: $483,565 federal, $0 net investment income tax and $118,590 New Mexico tax. Spread over 10 years, the tax is $446,814.
Do nonresidents pay New Mexico tax when they sell property there?
New Mexico taxes a nonresident on gain from real estate and other property located in New Mexico, so selling New Mexico property from another state still means a New Mexico return.
Does New Mexico have a capital gains deduction or special rule?
The 40% business deduction applies to the sale of a New Mexico business and is capped at $1,000,000 of gain, so at most $400,000 is deducted