Work in New Mexico, Live in Texas: Taxes Explained

Answer first

Do you owe New Mexico income tax when you live in Texas?

Yes. New Mexico taxes every nonresident on income from a source inside the state, and wages you earn while physically working in New Mexico count as New Mexico source income. The 2025 PIT-1 instructions say a nonresident, including a person who resides in a state without income taxes, must file in New Mexico when the person is required to file a federal return and has income from any New Mexico source whatsoever. Texas has no personal income tax, so no Texas return is due on those wages, and you do not need a home-state credit for taxes paid to another state.

The Personal Income Tax overview page is even more direct. It states that New Mexico imposes tax on the net income of every resident and on the net income of every nonresident employed or engaged in business in, into or from this state. A shift you drive to in Hobbs, Farmington, Carlsbad, or across the border from El Paso puts you inside that rule.

This is general information, not tax advice. Confirm each rule against the current New Mexico Taxation and Revenue Department instructions before you file.

Filing

Which forms should a Texas resident file with New Mexico?

New Mexico uses one personal income tax return, Form PIT-1, for residents and nonresidents. Nonresidents with New Mexico income attach Schedule PIT-B, the New Mexico Allocation and Apportionment of Income Schedule, and enter B on PIT-1 line 18a to show that the tax on line 18 comes from PIT-B.

• Form PIT-1: the New Mexico Personal Income Tax Return.
• Schedule PIT-B: allocates your income and figures the New Mexico share of the tax.
• Form RPD-41096: an application for more time to file, only if you do not already have an IRS extension. New Mexico automatically accepts an IRS six-month extension.

For tax year 2025, paper and electronic returns were both due April 15, 2026; the later April 30 date for electronic filing was removed by House Bill 218 in 2025. An extension to file does not extend the time to pay, and interest runs on tax not paid by the due date. Returns sent without a payment go to P.O. Box 25122, Santa Fe, NM 87504-5122; returns mailed with a payment and a PIT-PV voucher go to P.O. Box 8390, Santa Fe, NM 87504-8390.

Residency

How does the 185-day rule affect Texas commuters?

New Mexico treats you as a resident if your domicile was in New Mexico for the entire year, or if you were physically present in New Mexico for a total of 185 days or more, counting only days you were there for 24 hours. Daily commuters and shift workers rarely build 185 full days.

The 2025 PIT-1 instructions give exactly this case: you live in Texas, work in New Mexico and were physically present on 185 partial days. Because you were not in New Mexico for 24 hours on any day, you are not a resident. You file PIT-1 as a nonresident and use PIT-B for the New Mexico wages. Someone who moves to New Mexico during the year intending to stay is a first-year resident under New Mexico's rules, not a nonresident.

Rates

What tax rates apply to nonresident New Mexico income?

House Bill 252, signed on March 6, 2024, restructured the brackets for tax years from 2025 on: six brackets from 1.5% to 5.9%, the first major change since 2005. For a single filer the table is 1.5% up to $5,500; $82.50 plus 3.2% up to $16,500; $434.50 plus 4.3% up to $33,500; $1,165.50 plus 4.7% up to $66,500; $2,716.50 plus 4.9% up to $210,000; and $9,748 plus 5.9% above that. The law has no sunset, so 2026 uses the same table.

The nonresident method is often misunderstood. PIT-B first figures the tax on your entire New Mexico taxable income from PIT-1 line 17, as if all of it were New Mexico income, and then multiplies that tax by your New Mexico percentage (New Mexico income divided by total income). Texas wages are not taxed, but they do raise the rate applied to your New Mexico wages. Your New Mexico taxable income starts from federal adjusted gross income and uses the federal standard deduction: $15,750 for a single filer in 2025 and $16,100 in 2026.

New Mexico's low- and middle-income exemption can be claimed in full by nonresidents, but only if federal adjusted gross income is $36,667 or less for a single filer.

Double taxation

Is a home-state credit needed if Texas has no income tax?

No. A credit for taxes paid to another state is a way to prevent the same wages from being taxed twice by two states. The Texas Comptroller says Texas does not have a personal income tax, so nothing in Texas needs to be offset. You file the New Mexico nonresident PIT-1 and pay New Mexico on the wages you earned there, and that is your only state income tax return.

Because there is no reciprocity agreement between Texas and New Mexico, an employee cannot ask a New Mexico employer to stop withholding New Mexico tax. No exemption form exists for a Texan working in New Mexico; the only special withholding form the Department mentions for nonresidents is Form RPD-41348, for military spouses.

Example: Texas resident, all workdays in New Mexico, $60,000 salary

Single filer, wages only, federal standard deduction. The low- and middle-income exemption does not apply above $36,667 of AGI. If only part of the work is in New Mexico, the tax below is multiplied by the PIT-B percentage (for 200 of 240 days, about $1,392 for 2025). Approximate.

Local, remote, moving

What about local taxes, remote work, or moving mid-year?

For local taxes, the Department's personal income tax materials cover only the state tax; cities and counties levy a gross receipts tax on business receipts, which shows up in prices rather than on your paycheck. The Texas Comptroller says Texas has no personal income tax.

Remote work changes the source rule, with conditions. Nonresidents report the wages earned inside New Mexico or for services performed there. Leave pay (annual, sick and holiday) tied to New Mexico work is New Mexico income. To move days you worked outside New Mexico out of New Mexico income, use the PIT-110 worksheet, and note that partial days do not count as days assigned outside New Mexico. Keep a workday log that supports your split.

If you move to New Mexico mid-year to stay, you file as a first-year resident, and the PIT-1 instructions explain how to split the year.

Withholding fixes

What if your employer withheld the wrong state tax?

Texas has no state income tax, so there is no Texas withholding. New Mexico has no state version of Form W-4; employees fill in a copy of the federal Form W-4 for New Mexico withholding. Employers withhold New Mexico tax from a nonresident only on wages earned in New Mexico, and they do not have to withhold at all for a nonresident who works in New Mexico for 15 or fewer days in the calendar year.

If withholding falls short, check the estimated tax rule: New Mexico expects estimated payments if your tax liability is $1,000 or more and your withholding does not reach the required annual payment. Covered employees also see a small workers' compensation fee, $2.25 per quarter from July 1, 2025.

To recover an overpayment, file PIT-1 with PIT-B and enter the New Mexico withholding from your W-2. The Department says electronically filed returns are generally processed within 8 to 12 weeks or less, and its enhanced identity review can add time.

Verify

Where can you find the official New Mexico rules?

Two documents settle most questions for a Texas and New Mexico commuter: the current PIT-1 instruction booklet (who must file, extensions, estimated tax and the Tax Look Up Table) and the Schedule PIT-B instructions (allocation, leave pay and the PIT-110 worksheet). Both are on tax.newmexico.gov. The Department's personal income tax overview links to an older rate table, so use the current PIT-1 table or the statute for the 2025 and later brackets.

For questions about your own return, call the Department at (866) 285-2996 once enough time has passed for processing. Keep copies of every W-2, PIT-1 and PIT-B in case the Department asks for verification.