Gambling winnings tax in New Mexico

New Mexico allows gambling losses only if you itemize on your federal return. Take the standard deduction and it taxes your gross winnings. Whether only 90 percent of your losses count from 2026 is not settled.

Checked against New Mexico’s own sources on 2026-09-25.

In short

A win can shrink or end New Mexico’s low- and middle-income exemption, because the exemption gets smaller as your federal AGI goes up.10, 9
If you get Social Security, a win that takes your federal AGI over the line for your filing status ends New Mexico’s Social Security income exemption for all of it.1
If you itemize federally, New Mexico makes you add back the state and local tax part, but never below the federal standard deduction.3

How New Mexico treats gambling losses

New Mexico allows the deduction only to filers who itemize on the federal return. Take the federal standard deduction and the offset disappears, so gross winnings are taxed even in a year you finished down.

The two examples below are the same numbers the calculator uses, worked at New Mexico rates.

Two examples, worked at 2026 New Mexico rates

A single filer with $60,000 of other income who takes the standard deduction on everything except gambling losses.

A losing year

You win $50,000 and lose $52,000, so you finish down $2,000.

Federal: $3,596
New Mexico: $907
Total: $4,503

You finished the year down and still owe tax.

Federally you itemize, so your losses offset your winnings, but the 2026 rule caps that deduction at 90 percent and leaves $3,200 taxable. New Mexico allows the loss deduction only to filers who itemize federally, which you do. Your New Mexico income, after the federal standard deduction, or your itemized deductions where you itemize federally and they are larger, goes from $43,900 without the win to $63,200 with it. The extra $19,300 is taxed at 4.7 percent, which comes to $907.

A winning year

You win $50,000 and lose $10,000, so you finish up $40,000.

Federal: $10,350
New Mexico: $2,405
Total: $12,755

Federally you take the $16,100 standard deduction, which is worth more than itemizing, so your gambling losses do not reduce your federal tax at all. New Mexico allows the loss deduction only to filers who itemize federally, and you do not. Your New Mexico income, after the federal standard deduction, or your itemized deductions where you itemize federally and they are larger, goes from $43,900 without the win to $93,900 with it. The extra $50,000 is taxed at graduated rates, which comes to $2,405.

New Mexico income tax rates, 2026

4, 8

Single filer thresholds. Other filing statuses use different bands.

Taxable income	Rate
$0 to $5,500	1.5 percent
$5,500 to $16,500	3.2 percent
$16,500 to $33,500	4.3 percent
$33,500 to $66,500	4.7 percent
$66,500 to $210,000	4.9 percent
$210,000 and above	5.9 percent

The calculator also applies what this table leaves out: a low- and middle-income exemption that falls as income rises, taken before the table and the federal overall limit on itemized deductions at the top federal bracket, taken before the table.

The federal 90 percent loss limit in New Mexico

6, 7, 12

From tax year 2026 the federal deduction for gambling losses is cut to 90 percent of what you lost, and never more than what you won. Public Law 119-21 did it, at section 70114(a), by rewriting 26 U.S.C. 165(d).

New Mexico has not said whether the federal 90 percent limit applies. Its own law measures the state deduction by the federal figure, so the limit can arrive without New Mexico doing anything. New Mexico follows the federal code as it changes.

Our estimate assumes the limit applies, which gives the higher tax. The calculator also shows the tax if the limit does not apply. We would rather tell you the number could be lower than let you plan around one that turns out to be too low.

If you do not live in New Mexico

A nonresident with income from inside and outside New Mexico allocates and apportions on Schedule PIT-B rather than using the rate tables directly.

The calculator works the bill for somebody who lives in New Mexico. It does not apportion income between states, so a nonresident return is not what the figure above describes.

More about New Mexico

The low- and middle-income exemption

New Mexico’s low- and middle-income exemption is $2,500 an exemption. It goes down by a share of your federal AGI above a starting point, and it reaches nothing at a cutoff:10, 9

Filing status	Goes down above	By	Nothing left at
Single	$20,000	15 percent	$36,667
Married filing jointly or head of household	$30,000	10 percent	$55,000
Married filing separately	$15,000	20 percent	$27,500

Gambling winnings count toward this AGI, so a win shrinks the exemption and can take it away completely.

If you get Social Security

New Mexico exempts your Social Security income only while your federal AGI is not more than $100,000 single, $75,000 married filing separately, or $150,000 joint, head of household or surviving spouse. Above that line, none of it is exempt.1

If you itemize

If you itemize federally, New Mexico makes you add back the state and local tax part, but never below the federal standard deduction.3

If you offset winnings with losses in your federal itemized deductions, the department may ask you for documents that prove the losses.5

Local tax

New Mexico has no local income tax on individuals. Its local taxes are gross receipts taxes on businesses.

If you are a tribal member

If you are an enrolled member of a New Mexico tribe, nation or pueblo, you do not need to file a New Mexico return when both are true: you live within your own reservation, pueblo grant or Indian country, and all your income was earned from work there. Living there is not enough on its own. Gambling winnings are not income from work, so if you had any, this exception does not apply and you need to file.

About this estimate

If you enter your Social Security, the calculator works out the exemption. If you do not, it warns you when a win takes your AGI over the Social Security line.

The calculator counts one low- and middle-income exemption for single or separate filers and two for joint or head of household.

If you are 65 or older, the calculator takes off the exemption of up to $8,000 for each person 65 or older. It falls $1,000 for each $1,500 of federal AGI over $18,000 single or $15,000 separate, or each $3,000 over $30,000 joint or head of household, so a win can shrink it. It leaves out the property tax rebate for people 65 or older, which needs your property tax or rent.

The calculator does not include the add-back of state and local tax for federal itemizers.

Sources

Every figure above traces to a primary source: a statute, an administrative code, a state agency page, or official form instructions.

1. 2025 PIT-ADJ instructions, line 25 and Table 2: the Social Security income exemption and its AGI lines, and line 13 and Table 1: the exemption for persons 65 or older or blind, up to $8,000 and nothing above $28,500 single, $25,500 separate, or $51,000 joint or head of household (checked 2026-10-12)
2. 2025 PIT-RC instructions, section 3: the property tax rebate for persons 65 or older, up to $250 at modified gross income of $16,000 or less, which counts gross gambling winnings (checked 2026-10-12)
3. 2025 PIT-1 instructions, lines 10 and 12: the federal standard or itemized deduction, and the state tax add-back capped at the standard deduction (checked 2026-09-25)
4. House Bill 252 (2024), NMSA 7-2-7 rate tables for years beginning on or after 2025 (checked 2026-09-11)
5. Form PIT-1 instructions (2025), line 12 federal deduction and gambling substantiation (checked 2026-09-11)
6. NMSA 1978 7-2-2(N)(2), net income excludes an amount equal to the itemized deductions defined in IRC 63 allowed the taxpayer, less state and local income and sales taxes (checked 2026-09-24)
7. NMSA 1978 7-2-2(J), "Internal Revenue Code" means the United States Internal Revenue Code of 1986, as amended (checked 2026-09-24)
8. NMSA 1978 7-2-7, individual income tax rates for taxable years beginning on or after January 1, 2025, compiled (checked 2026-09-24)
9. PIT-1 instructions (2025), New Mexico Low- and Middle-Income Tax Exemption Worksheet (checked 2026-09-25)
10. NMSA 1978 7-2-5.8, exemption for low- and middle-income taxpayers (checked 2026-09-24)
11. NMSA 1978 7-2-2(N)(2): net income excludes "the itemized deductions defined in Section 63 of the Internal Revenue Code ... allowed the taxpayer", which from 2026 are after the federal overall limit on itemized deductions (checked 2026-10-01)

The federal rule, for the parts of this page that rest on it

12. Public Law 119-21 section 70114(a), which rewrote 26 U.S.C. 165(d) on wagering losses from tax year 2026 and sets out its text (checked 2026-10-18)

We could not confirm these from an official source: the payout at which withholding starts; the withholding rate.