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Fill Out Your New Mexico Withholding Form

The New Mexico Withholding Tax form, known as FYI-104, plays a crucial role for both employers and employees in the state of New Mexico. It outlines the process for withholding state income tax from employees' wages, a practice that ensures taxes are paid gradually throughout the year rather than as a lump sum at tax time. Given the changes initiated in 2020, understanding this form is essential for accurate tax withholding and compliance.

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New Mexico has implemented significant alterations to its withholding tax system, responding to changes at the federal level and aiming to simplify the process for both employees and employers. As of January 1, 2022, New Mexico no longer adjusts state withholding based on the number of allowances claimed on federal forms prior to 2020, a move reflecting the federal government's revision of the Form W-4 in 2020, which eliminated allowances. Employees can still use any version of the Federal Form W-4 for New Mexico withholding purposes, but it's essential they follow the updated state withholding tables provided in the recent publication for accurate withholding. Employers are tasked with withholding New Mexico income tax from employees' wages and must adhere to updated guidelines for reporting and paying these taxes effectively from July 1, 2021. A standout feature of the New Mexico system is its adaptability, allowing employees to specify additional withholdings on their W-4 forms to cater to unique financial needs or expectations. Special provisions account for non-resident employees and those receiving income from pensions, annuities, or gambling winnings, with specific criteria outlined for withholding responsibilities. The comprehensive reform aims not only to streamline the withholding process but also to ensure that employees understand the impact of these changes on their take-home pay and encourage them to review their withholding preferences accordingly. Furthermore, the publication outlines detailed instructions for annual reconciliation, providing guidance for correctly reporting state tax withheld, ensuring compliance, and facilitating accurate tax reporting and payments.

New Mexico Withholding Sample

FYI-104

FOR YOUR INFORMATION

New Mexico

Taxation and Revenue Department

Tax Information/Policy Office  P.O. Box 630  Santa Fe, New Mexico

87504-0630

NEW MEXICO

WITHHOLDING TAX

Effective January 1, 2023

Please note: There are no longer adjustments made to New Mexico withholding due to the number of allowances taken on pre-2020 Federal Form W-4. However, employees should continue to use the correct number of withholding allowances if using pre-2020 Federal Form W-4. Employees may continue to use any Federal Form W-4 for New Mexico withholding but the New Mexico state withholding tables found in this publication should be used.

This publication contains general information on the New Mexico withholding tax and tax tables for the percentage method of withholding. Taxpayers should be aware that subsequent legislation, regulations, court decisions, revenue rulings, notices and announcements may affect the accuracy of its contents. For more information, please contact the nearest tax district field office or check the department’s web site at www.tax.newmexico.gov.

CONTENTS
General Information For New Mexico Withholding Tax	2
Changes to forms beginning 2020	2
Who Must Withhold	2
Amount To Withhold	2
How To Use The Withholding Tax Tables	2
How To Report And Pay Withholding Taxes	3
Additional Withholding Amounts	3
Withholding On Gambling Winnings	3
Annual Withholding Statements	3
Annual Reconciliation	4
Withholding From Irregular Or Supplemental Wages Or Fringe Benefits	4
Special Situations	4
For Further Information	4
New Mexico State Wage Withholding Tax Tables	5

FYI-104  REV. 11/2022  page 1

New Mexico Taxation and Revenue Department

General Information For

New Mexico Withholding Tax

New Mexico withholding tax is similar to federal withholding tax. It is calculated based on an estimate of an employee or individual’s New Mexico income tax liability and is then credited against the employee or individual’s actual income tax liability on that person’s New Mexico personal income tax return.

Changes to forms beginning 2020

The Federal government issued a revised Federal Form W-4 in tax year 2020. The 2020 and later W-4 forms do not require employees to certify the number of allowances for federal withholding purposes. According to federal guidelines, employers may keep both 2020 and subsequent W-4 forms and pre-2020 W-4 forms on file for their employees, depending on when they started employment.

New Mexico does not have a state equivalent of the Federal Form W-4. Instead, employees should complete a copy of the Federal Form W-4 for New Mexico withholding tax purposes, writing "For New Mexico State Withholding Only" across the top in prominent letters. Employers should keep the New Mexico W-4 in the employee's personnel file. This duplicate W-4 is not mandatory. It is a convenience for employer and employee.

Employees who have income that is exempt from New Mexico tax (for example, Native Americans working and living on their tribal land; military members with income from active-duty military service) should not have New Mexico tax withheld. Employees with exempt income should indicate “exempt” on line 7 of the pre-2020 W-4 form or follow Step 4(c) on the 2020 or later W-4.

Due to changes in federal law effective from 2018, state income tax liability is not reduced based on the number of personal exemptions claimed by a taxpayer. Although the Standard Deduction amount was increased for all taxpayers, the tax liability will likely increase for households with 2 or more dependents. The withholding tables in this publication have been updated to reflect these changes and the change to the federal W-4 by removing withholding allowance deduction amounts from wages. Employees will see an increase in their withholding tax as a result of these changes and to federal law. The Department would recommend that employers communicate these changes to their employees. It may be beneficial to examine the withholding changes for both federal and state taxes and determine if employees would like additional amounts withheld from their paychecks for each pay period.

Employees may opt to have additional amounts of money taken out from their paychecks for New Mexico withholding purposes. This can be requested by employees on their New Mexico withholding W-4 described above.

The Department’s guidance on withholding relies on the Internal Revenue Service information for accuracy. This publication is subject to revision as further guidance from the Internal Revenue Service is released.

Who Must Withhold

Every employer, including employers of some agricultural workers, who withholds a portion of an employee’s wages for payment of federal income tax must withhold New Mexico income tax. There is a limited exception for certain nonresident employees (See Note 2 below.) Others required to withhold New Mexico income tax include gambling establishments on paid winnings and payers of pension and annuity income when requested to do so. More information is provided on this below.

“Employer” means a person or an employee of that person, doing business in New Mexico or deriving income from New Mexico sources who pays wages to an employee for services performed. An employer is the person having control of the payment of wages.

“Employee” means a New Mexico resident who performs services either within or without the state for an employer, or a nonresident of New Mexico who performs services within the state for an employer.

“Wages” means remuneration in cash or other form for services performed by an employee for an employer.

Notes:

1)Pension and annuity income of a New Mexico resident is subject to income tax in New Mexico, but New Mexico does not require payers to withhold state income tax on pensions and annuities unless the payee requests the payer of their retirement benefits to withhold state tax. To report withholding tax, a payer must be registered with the state using TRD-41409, Non-wage Withholding Tax Return.

2)Employers are not required to withhold New Mexico income tax from wages of nonresident employees working in New Mexico for 15 or fewer days during the calendar year.

3)Persons who are self-employed should not report withholding tax on their wages. Self-employed individuals should make estimated payments using the Form PIT-ES.

Amount to Withhold

Refer to the New Mexico State Wage Withholding Tax Tables for Percentage Method of Withholding on page 5 of this publication for the amount to withhold. No withholding is required if the total withholding for an employee during any one month is less than one dollar. For New Mexico residents the employer is required to withhold New Mexico income tax from all wages of the employee regardless of the employee’s work location. For nonresident employees, the employer is required to withhold New Mexico income tax only from wages the employee earns within the state. Refer to definitions of “employer,” “employee” and “wages” to determine if withholding tax is required.

How to use the Withholding Tax Tables

Determine the amount to withhold from the appropriate tax tables starting on page 5 based on the payroll period and the employee’s filing status.

FYI-104  REV. 11/2022  page 2

New Mexico Taxation and Revenue Department

Example: A married employee has taxable wages of $1,000.00 weekly. This employee has also asked that an additional $20.00 be taken out of their check each pay period.

1.Determine the withholding based on the taxable wage payment of $1,000.00

2.Use Table 1 for weekly pay period. Use section

(b) for a married person. If the amount of wages is over $728 but not over $1,036, the amount of state tax withheld shall be $14.77 + 4.9% of excess over $728.

3.$1000.00-$728.00 = $272.00 x 0.049 = $13.33

4.$14.77 + $13.33 = $28.10 withholding tax due

5.$28.10 + $20.00 (Additional withholding requested by employee) = $48.10.

How to Report and Pay Withholding Taxes

New Mexico withholding tax prior to July 1, 2021 was reported along with gross receipts and compensating tax on the Form CRS-1. After July 1, 2021, use TRD-41414, Wage Withholding Tax Return OR TRD-41409, Non-Wage Withholding Tax Return. All tax returns can be filed online at https://tap.state.nm.us. Taxes are due on the 25th of the month following the end of the reporting period. If the 25th is on a Saturday, Sunday, or legal holiday, the tax return and payment is due the next business day. The Department uses the postmark date on the envelope to determine if the paper return was filed on time. A tax return must be filed whether or not any tax is due. If no tax is due, file a “zero” report. Do not mail cash to the Department.

Please note: TRD-41414, Wage Withholding Tax Return should be used for all employee withholding. Withholding tax from gambling winnings, pensions and annuities, or other income will be reported on the TRD-41409, Non- Wage Withholding Tax Return. The due dates for these returns will be the same as the due dates used prior to July 1, 202,1 for the CRS-1 return.

Reporting withholding information to the Department of Workforce Solutions and the Workers Compensation Administration does not fulfill your obligation to report and pay withholding tax to the Taxation and Revenue Department. Taxpayers must still file and pay using one of the methods described in the above paragraph.

If you change your business name or address or need to cancel your New Mexico Business Tax Identification Number (NMBTIN) previously known as CRS I.D. number, use Form ACD-31015, Business Tax Registration Application and Update Form available from your local district office or online at www.tax.newmexico.gov. Your reporting obligation does not cease automatically when you stop doing business or paying wages. You must notify the Department to cancel your NMBTIN.

Starting on July 1, 2021, the name of the CRS I.D. number changed to New Mexico Business Tax Identification Number (NMBTIN). The name change of the identification number will happen automatically. If you will need to cancel the use of the NMBTIN or change your business address, you will use Form ACD-31015 as explained previously.

Child support withholding is NOT reported to the Taxation and Revenue Department. For information about child support withholding you will need to contact the Human Services Department at 505-827-7200.

If you use the cumulative method of withholding for federal withholding, you may use this same method for your state withholding.

Additional Withholding Amounts

Many employees request additional amounts be withheld for federal purposes (see Form W-4) but very few consider additional withholding for state purposes. Additional state withholding may be done on the W-4 kept for New Mexico withholding purposes described above.

Withholding on Gambling Winnings

Operators, including nonprofit entities, of gambling establishments (racetracks, casinos, state lottery, bingo) must withhold 6% from winnings and file income and withholding information returns for state purposes if they are required to withhold or report for federal purposes. Operators must report and pay the amount of state tax withheld from gambling winnings prior to July 1, 2021, on the Form CRS-1, and after July 1, 2021, on the TRD- 41409, Non-Wage Withholding Tax Return is required for both residents and nonresidents.

Annual Withholding Statements

Every person who has withheld state tax during the year from wages, pensions and annuities, or gambling winnings is required to file an annual statement of withholding on or before the last day of January for each employee, pension or annuity recipient, or gambling winner. New Mexico accepts the state copy of any Federal income and withholding statement, including Federal Form W-2, W2-G, 1042-S, and 1099-R, or any substitute form acceptable to the Internal Revenue Service so long as it reflects the withholders name, address and identification number, the recipient's name and social security number, and the amount of New Mexico income and withholding. If employers have established a medical care savings account program for their employees, it is the responsibility of the employer to determine what amounts are exempt from taxation. The employer reduces the New Mexico taxable wages reported on Federal Form W-2 by the amounts established by the employer or account administrator as exempt from income tax.

Taxpayers who need to submit income and withholding statements to the Department may learn more by reviewing Publication FYI-330, Income And Withholding Information Returns And Filing Methods, available online at www.tax.newmexico.gov/forms-publications.aspx or through your local district office.

Note: Starting June 18, 2021, the law requires that employers provide information regarding state assistance for low-income New Mexicans, including information regarding tax rebates and credits for low-income tax filers provided by the state, such as the low-income comprehensive tax rebate and the working families tax

FYI-104  REV. 11/2022  page 3

New Mexico Taxation and Revenue Department

credit. The information shall be provided in English and Spanish. This information is located in B-300.10, State Assistance for Low-Income New Mexicans. This publication is available in English and Spanish and can be located on the Department’s website:

https://www.tax.newmexico.gov/forms-publications/ in the folders - Publications/Bulletins/300 Series – Income Taxes.

Note: Starting tax year 2019, the Department began requiring electronic submittal of income and withholding information returns for employers who have 25 or more employees. The withholding statements are due at the end of January. Electronic submissions can be submitted through the Combined Federal/State Filing Program or by using TAP at https://tap.state.nm.us

Annual Reconciliation

New Mexico withholding taxpayers may file Form RPD- 41072, Annual Summary of Withholding Tax. The report is available for taxpayer’s use but is not required to be filed. This report allows for the taxpayer to reconcile the total amounts shown as withheld on annual withholding statements furnished to withholdees (Federal Forms W-2, W-2G or 1099-R) with the total tax withheld and paid to New Mexico prior to July 1, 2021, on Form CRS-1, and after July 1, 2021, on the TRD-41414, Wage Withholding Tax Return or TRD-41409, Non-Wage Withholding Tax Return. If the taxpayer has underreported withholding on the withholding return, amended returns for the period(s) in which underreporting occurred should be attached and the difference remitted to the Department. If an overpayment of withholding was made, attach Form RPD-41071, Application for Refund and the amended returns for the period(s) in which overpayments occurred. For more information on this see FYI-330, Income and Withholding Information Returns and Filing Methods.

Withholding from Irregular or

Supplemental Wages or Fringe Benefits

The same method used for calculating federal withholding on irregular or supplemental wages should be used for state withholding. If the taxpayer uses the cumulative method of withholding for federal withholding, this same method may be used for state withholding. If withholding from fringe benefits for federal purposes, the taxpayer must also withhold from fringe benefits for state purposes using the same method used for calculating federal withholding. If the federal withholding is calculated using a flat percent, a flat 5.9 percent of the supplemental wage or fringe benefit amount should be withheld for state tax purposes.

NOTE: In the case of a married employee who has elected withholding at the higher single rate for federal purposes, the single rate for New Mexico state withholding purposes must also be used.

Special Situations

Generally, if an employee’s withholding is correct for federal purposes, it will be correct for state income tax purposes, but there are certain situations in which an

employee may be correctly withholding for federal purposes but under withhold for state purposes:

1)If the employee has supplemental, overtime pay, bonuses that are paid separately from their normal wages, the Department recommends using Table 8 on page 8.

2)If the employee increased W-4 allowances to offset expected federal tax credits such as the Child Tax Credit or credits for child or dependent care expenses. (If the employee wishes to reduce their withholding for state purposes they can use the 2020 Federal Form W- 4 (Step 4b)

3)If the employee requested that additional amounts be withheld for federal purposes.

There are also situations where individuals may have income that is subject to federal taxation but exempt from taxation by New Mexico. In these situations, New Mexico withholding on the exempt income would not be necessary.

Examples of income exempt from New Mexico tax are:

1)Income of a Native American who is a member of a New Mexico federally recognized Indian nation, tribe or pueblo that was wholly earned on the lands of the Indian nation or pueblo of which the individual is an enrolled member while domiciled on that land, Indian nation or pueblo.

2)Income from active-duty military service or the income of spouses of an active duty service members who elect to keep their out-of-state residence or use the same out-of-state residence as the servicemember.

Employment may require some New Mexico residents to spend extensive time in another state with an income tax that is comparable to the New Mexico income tax. Residents of New Mexico are generally subject to New Mexico income tax on all their income, but if that income is also taxed by another state, New Mexico allows a credit for the other state’s income tax on that income on their personal income tax return. New Mexico withholding tax can be reduced or eliminated on such wages. To reduce or eliminate withholding on such wages, taxpayers should indicate this on their Form W-4 for New Mexico withholding tax.

For Further Information

If employees express concern about their withholding, employers may recommend that they obtain the following publications:

Internal Revenue Service Form W-4, Employee’s Withholding Allowance Certificate. (New Mexico does not have a state equivalent of the federal W-4 form. Employees should complete a copy of the federal W- 4 for New Mexico, writing "For New Mexico State Withholding Only" across the top in prominent letters.

Internal Revenue Service Publication 919 Is My Withholding Correct? (Call 1-800-829-3676 to order this publication.)

FYI-104  REV. 11/2022  page 4

New Mexico Taxation and Revenue Department

New Mexico State Wage Withholding Tax Tables for Percentage Method of Withholding

(For wages paid on or after January 1, 2023)

										Table 1 - If the Payroll Period with Respect to an Employee is WEEKLY
(a) SINGLE person										(b) MARRIED person										(c) HEAD of HOUSEHOLD person
If the amount					The amount of state					If the amount					The amount of state					If the amount					The amount of state
of wages is:					tax withheld shall be:					of wages is:					tax withheld shall be:					of wages is:					tax withheld shall be:
Not Over		$	133		$0.00					Not Over		$	266		$0.00					Not Over		$	200		$0.00
Over:		But not over:					of excess over -			Over:		But not over:					of excess over -			Over:		But not over:					of excess over -
$	133	$	239				1.7%	$	133	$	266	$	420	$	-		1.7%	$	266	$	200	$	354				1.7%	$	200
$	239	$	345	$	1.80	+	3.2%	$	239	$	420	$	574	$	2.62	+	3.2%	$	420	$	354	$	508	$	2.62	+	3.2%	$	354
$	345	$	441	$	5.18	+	4.7%	$	345	$	574	$	728	$	7.54	+	4.7%	$	574	$	508	$	662	$	7.54	+	4.7%	$	508
$	441	$	633	$	9.70	+	4.9%	$	441	$	728	$	1,036	$	14.77	+	4.9%	$	728	$	662	$	969	$	14.77	+	4.9%	$	662
$	633	$	941	$	19.13	+	4.9%	$	633	$	1,036	$	1,497	$	29.85	+	4.9%	$	1,036	$	969	$	1,431	$	29.85	+	4.9%	$	969
$	941	$	1,383	$	34.20	+	4.9%	$	941	$	1,497	$	2,189	$	52.46	+	4.9%	$	1,497	$	1,431	$	2,123	$	52.46	+	4.9%	$	1,431
$	1,383	$	2,537	$	55.88	+	4.9%	$	1,383	$	2,189	$	4,113	$	86.38	+	4.9%	$	2,189	$	2,123	$	4,046	$	86.38	+	4.9%	$	2,123
$	2,537	$	4,172	$	112.41	+	4.9%	$	2,537	$	4,113	$	6,324	$	180.62	+	4.9%	$	4,113	$	4,046	$	6,258	$	180.62	+	4.9%	$	4,046
$	4,172		and over	$	192.51	+	5.9%	$	4,172	$	6,324		and over	$	288.98	+	5.9%	$	6,324	$	6,258		and over	$	288.98	+	5.9%	$	6,258

									Table 2 - If the Payroll Period with Respect to an Employee is BI-WEEKLY
(a) SINGLE person										(b) MARRIED person										(c) HEAD of HOUSEHOLD person
If the amount					The amount of state					If the amount					The amount of state					If the amount					The amount of state
of wages is:					tax withheld shall be:					of wages is:					tax withheld shall be:					of wages is:					tax withheld shall be:
Not Over		$	266		$0.00					Not Over		$	533		$0.00					Not Over		$	400		$0.00
Over:		But not over:					of excess over -			Over:		But not over:					of excess over -			Over:		But not over:					of excess over -
$	266	$	478				1.7%	$	266	$	533	$	840				1.7%	$	533	$	400	$	708				1.7%	$	400
$	478	$	689	$	3.60	+	3.2%	$	478	$	840	$	1,148	$	5.23	+	3.2%	$	840	$	708	$	1,015	$	5.23	+	3.2%	$	708
$	689	$	882	$	10.37	+	4.7%	$	689	$	1,148	$	1,456	$	15.08	+	4.7%	$	1,148	$	1,015	$	1,323	$	15.08	+	4.7%	$	1,015
$	882	$	1,266	$	19.40	+	4.9%	$	882	$	1,456	$	2,071	$	29.54	+	4.9%	$	1,456	$	1,323	$	1,938	$	29.54	+	4.9%	$	1,323
$	1,266	$	1,882	$	38.25	+	4.9%	$	1,266	$	2,071	$	2,994	$	59.69	+	4.9%	$	2,071	$	1,938	$	2,862	$	59.69	+	4.9%	$	1,938
$	1,882	$	2,766	$	68.40	+	4.9%	$	1,882	$	2,994	$	4,379	$	104.92	+	4.9%	$	2,994	$	2,862	$	4,246	$	104.92	+	4.9%	$	2,862
$	2,766	$	5,074	$	111.75	+	4.9%	$	2,766	$	4,379	$	8,225	$	172.77	+	4.9%	$	4,379	$	4,246	$	8,092	$	172.77	+	4.9%	$	4,246
$	5,074	$	8,343	$	224.83	+	4.9%	$	5,074	$	8,225	$	12,648	$	361.23	+	4.9%	$	8,225	$	8,092	$	12,515	$	361.23	+	4.9%	$	8,092
$	8,343		and over	$	385.02	+	5.9%	$	8,343	$	12,648		and over	$	577.96	+	5.9%	$	12,648	$	12,515		and over	$	577.96	+	5.9%	$	12,515

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New Mexico Taxation and Revenue Department

New Mexico State Wage Withholding Tax Tables for Percentage Method of Withholding

(For wages paid on or after January 1, 2023)

									Table 3 - If the Payroll Period with Respect to an Employee is SEMI-MONTHLY
(a) SINGLE person										(b) MARRIED person										(c) HEAD of HOUSEHOLD person
If the amount					The amount of state					If the amount					The amount of state					If the amount					The amount of state
of wages is:					tax withheld shall be:					of wages is:					tax withheld shall be:					of wages is:					tax withheld shall be:
Not Over		$	289		$0.00					Not Over		$	577		$0.00					Not Over		$	433		$0.00
Over:		But not over:					of excess over -			Over:		But not over:					of excess over -			Over:		But not over:					of excess over -
$	289	$	518				1.7%	$	289	$	577	$	910				1.7%	$	577	$	433	$	767				1.7%	$	433
$	518	$	747	$	3.90	+	3.2%	$	518	$	910	$	1,244	$	5.67	+	3.2%	$	910	$	767	$	1,100	$	5.67	+	3.2%	$	767
$	747	$	955	$	11.23	+	4.7%	$	747	$	1,244	$	1,577	$	16.33	+	4.7%	$	1,244	$	1,100	$	1,433	$	16.33	+	4.7%	$	1,100
$	955	$	1,372	$	21.02	+	4.9%	$	955	$	1,577	$	2,244	$	32.00	+	4.9%	$	1,577	$	1,433	$	2,100	$	32.00	+	4.9%	$	1,433
$	1,372	$	2,039	$	41.44	+	4.9%	$	1,372	$	2,244	$	3,244	$	64.67	+	4.9%	$	2,244	$	2,100	$	3,100	$	64.67	+	4.9%	$	2,100
$	2,039	$	2,997	$	74.10	+	4.9%	$	2,039	$	3,244	$	4,744	$	113.67	+	4.9%	$	3,244	$	3,100	$	4,600	$	113.67	+	4.9%	$	3,100
$	2,997	$	5,497	$	121.06	+	4.9%	$	2,997	$	4,744	$	8,910	$	187.17	+	4.9%	$	4,744	$	4,600	$	8,767	$	187.17	+	4.9%	$	4,600
$	5,497	$	9,039	$	243.56	+	4.9%	$	5,497	$	8,910	$	13,702	$	391.33	+	4.9%	$	8,910	$	8,767	$	13,558	$	391.33	+	4.9%	$	8,767
$	9,039		and over	$	417.10	+	5.9%	$	9,039	$	13,702		and over	$	626.13	+	5.9%	$	13,702	$	13,558		and over	$	626.13	+	5.9%	$	13,558

										Table 4 - If the Payroll Period with Respect to an Employee is MONTHLY
(a) SINGLE person										(b) MARRIED person										(c) HEAD of HOUSEHOLD person
If the amount					The amount of state					If the amount					The amount of state					If the amount					The amount of state
of wages is:					tax withheld shall be:					of wages is:					tax withheld shall be:					of wages is:					tax withheld shall be:
Not Over		$	577		$0.00					Not Over		$	1,154		$0.00					Not Over		$	867		$0.00
Over:		But not over:					of excess over -			Over:		But not over:					of excess over -			Over:		But not over:					of excess over -
$	577	$	1,035				1.7%	$	577	$	1,154	$	1,821				1.7%	$	1,154	$	867	$	1,533				1.7%	$	867
$	1,035	$	1,494	$	7.79	+	3.2%	$	1,035	$	1,821	$	2,488	$	11.33	+	3.2%	$	1,821	$	1,533	$	2,200	$	11.33	+	3.2%	$	1,533
$	1,494	$	1,910	$	22.46	+	4.7%	$	1,494	$	2,488	$	3,154	$	32.67	+	4.7%	$	2,488	$	2,200	$	2,867	$	32.67	+	4.7%	$	2,200
$	1,910	$	2,744	$	42.04	+	4.9%	$	1,910	$	3,154	$	4,488	$	64.00	+	4.9%	$	3,154	$	2,867	$	4,200	$	64.00	+	4.9%	$	2,867
$	2,744	$	4,077	$	82.88	+	4.9%	$	2,744	$	4,488	$	6,488	$	129.33	+	4.9%	$	4,488	$	4,200	$	6,200	$	129.33	+	4.9%	$	4,200
$	4,077	$	5,994	$	148.21	+	4.9%	$	4,077	$	6,488	$	9,488	$	227.33	+	4.9%	$	6,488	$	6,200	$	9,200	$	227.33	+	4.9%	$	6,200
$	5,994	$	10,994	$	242.13	+	4.9%	$	5,994	$	9,488	$	17,821	$	374.33	+	4.9%	$	9,488	$	9,200	$	17,533	$	374.33	+	4.9%	$	9,200
$	10,994	$	18,077	$	487.13	+	4.9%	$	10,994	$	17,821	$	27,404	$	782.67	+	4.9%	$	17,821	$	17,533	$	27,117	$	782.67	+	4.9%	$	17,533
$	18,077		and over	$	834.21	+	5.9%	$	18,077	$	27,404		and over	$	1,252.25	+	5.9%	$	27,404	$	27,117		and over	$	1,252.25	+	5.9%	$	27,117

FYI-104 REV.11/2022 Page 6

New Mexico Taxation and Revenue Department

New Mexico State Wage Withholding Tax Tables for Percentage Method of Withholding

(For wages paid on or after January 1, 2023)

									Table 5 - If the Payroll Period with Respect to an Employee is QUARTERLY
(a) SINGLE person										(b) MARRIED person										(c) HEAD of HOUSEHOLD person
If the amount					The amount of state					If the amount					The amount of state					If the amount					The amount of state
of wages is:					tax withheld shall be:					of wages is:					tax withheld shall be:					of wages is:					tax withheld shall be:
Not Over		$	1,731		$0.00					Not Over		$	3,463		$0.00					Not Over		$	2,600		$0.00
Over:		But not over:					of excess over -			Over:		But not over:					of excess over -			Over:		But not over:					of excess over -
$	1,731	$	3,106				1.7%	$	1,731	$	3,463	$	5,463				1.7%	$	3,463	$	2,600	$	4,600				1.7%	$	2,600
$	3,106	$	4,481	$	23.38	+	3.2%	$	3,106	$	5,463	$	7,463	$	34.00	+	3.2%	$	5,463	$	4,600	$	6,600	$	34.00	+	3.2%	$	4,600
$	4,481	$	5,731	$	67.38	+	4.7%	$	4,481	$	7,463	$	9,463	$	98.00	+	4.7%	$	7,463	$	6,600	$	8,600	$	98.00	+	4.7%	$	6,600
$	5,731	$	8,231	$	126.13	+	4.9%	$	5,731	$	9,463	$	13,463	$	192.00	+	4.9%	$	9,463	$	8,600	$	12,600	$	192.00	+	4.9%	$	8,600
$	8,231	$	12,231	$	248.63	+	4.9%	$	8,231	$	13,463	$	19,463	$	388.00	+	4.9%	$	13,463	$	12,600	$	18,600	$	388.00	+	4.9%	$	12,600
$	12,231	$	17,981	$	444.63	+	4.9%	$	12,231	$	19,463	$	28,463	$	682.00	+	4.9%	$	19,463	$	18,600	$	27,600	$	682.00	+	4.9%	$	18,600
$	17,981	$	32,981	$	726.38	+	4.9%	$	17,981	$	28,463	$	53,463	$	1,123.00	+	4.9%	$	28,463	$	27,600	$	52,600	$	1,123.00	+	4.9%	$	27,600
$	32,981	$	54,231	$	1,461.38	+	4.9%	$	32,981	$	53,463	$	82,213	$	2,348.00	+	4.9%	$	53,463	$	52,600	$	81,350	$	2,348.00	+	4.9%	$	52,600
$	54,231		and over	$	2,502.63	+	5.9%	$	54,231	$	82,213		and over	$	3,756.75	+	5.9%	$	82,213	$	81,350		and over	$	3,756.75	+	5.9%	$	81,350

									Table 6 - If the Payroll Period with Respect to an Employee is SEMI-ANNUAL
(a) SINGLE person										(b) MARRIED person										(c) HEAD of HOUSEHOLD person
If the amount					The amount of state					If the amount					The amount of state					If the amount					The amount of state
of wages is:					tax withheld shall be:					of wages is:					tax withheld shall be:					of wages is:					tax withheld shall be:
Not Over		$	3,463		$0.00					Not Over		$	6,925		$0.00					Not Over		$	5,200		$0.00
Over:		But not over:					of excess over -			Over:		But not over:					of excess over -			Over:		But not over:					of excess over -
$	3,463	$	6,213				1.7%	$	3,463	$	6,925	$	10,925				1.7%	$	6,925	$	5,200	$	9,200				1.7%	$	5,200
$	6,213	$	8,963	$	46.75	+	3.2%	$	6,213	$	10,925	$	14,925	$	68.00	+	3.2%	$	10,925	$	9,200	$	13,200	$	68.00	+	3.2%	$	9,200
$	8,963	$	11,463	$	134.75	+	4.7%	$	8,963	$	14,925	$	18,925	$	196.00	+	4.7%	$	14,925	$	13,200	$	17,200	$	196.00	+	4.7%	$	13,200
$	11,463	$	16,463	$	252.25	+	4.9%	$	11,463	$	18,925	$	26,925	$	384.00	+	4.9%	$	18,925	$	17,200	$	25,200	$	384.00	+	4.9%	$	17,200
$	16,463	$	24,463	$	497.25	+	4.9%	$	16,463	$	26,925	$	38,925	$	776.00	+	4.9%	$	26,925	$	25,200	$	37,200	$	776.00	+	4.9%	$	25,200
$	24,463	$	35,963	$	889.25	+	4.9%	$	24,463	$	38,925	$	56,925	$	1,364.00	+	4.9%	$	38,925	$	37,200	$	55,200	$	1,364.00	+	4.9%	$	37,200
$	35,963	$	65,963	$	1,452.75	+	4.9%	$	35,963	$	56,925	$	106,925	$	2,246.00	+	4.9%	$	56,925	$	55,200	$	105,200	$	2,246.00	+	4.9%	$	55,200
$	65,963	$	108,463	$	2,922.75	+	4.9%	$	65,963	$	106,925	$	164,425	$	4,696.00	+	4.9%	$	106,925	$	105,200	$	162,700	$	4,696.00	+	4.9%	$	105,200
$	108,463		and over	$	5,005.25	+	5.9%	$	108,463	$	164,425		and over	$	7,513.50	+	5.9%	$	164,425	$	162,700		and over	$	7,513.50	+	5.9%	$	162,700

FYI-104 REV.11/2022 Page 7

New Mexico Taxation and Revenue Department

New Mexico State Wage Withholding Tax Tables for Percentage Method of Withholding

(For wages paid on or after January 1, 2023)

										Table 7 - If the Payroll Period with Respect to an Employee is ANNUAL
(a) SINGLE person										(b) MARRIED person										(c) HEAD of HOUSEHOLD person
If the amount					The amount of state					If the amount					The amount of state					If the amount					The amount of state
of wages is:					tax withheld shall be:					of wages is:					tax withheld shall be:					of wages is:					tax withheld shall be:
Not Over		$	6,925		$0.00					Not Over		$	13,850		$0.00					Not Over		$	10,400		$0.00
Over:		But not over:					of excess over -			Over:		But not over:					of excess over -			Over:		But not over:					of excess over -
$	6,925	$	12,425				1.7%	$	6,925	$	13,850	$	21,850				1.7%	$	13,850	$	10,400	$	18,400				1.7%	$	10,400
$	12,425	$	17,925	$	93.50	+	3.2%	$	12,425	$	21,850	$	29,850	$	136.00	+	3.2%	$	21,850	$	18,400	$	26,400	$	136.00	+	3.2%	$	18,400
$	17,925	$	22,925	$	269.50	+	4.7%	$	17,925	$	29,850	$	37,850	$	392.00	+	4.7%	$	29,850	$	26,400	$	34,400	$	392.00	+	4.7%	$	26,400
$	22,925	$	32,925	$	504.50	+	4.9%	$	22,925	$	37,850	$	53,850	$	768.00	+	4.9%	$	37,850	$	34,400	$	50,400	$	768.00	+	4.9%	$	34,400
$	32,925	$	48,925	$	994.50	+	4.9%	$	32,925	$	53,850	$	77,850	$	1,552.00	+	4.9%	$	53,850	$	50,400	$	74,400	$	1,552.00	+	4.9%	$	50,400
$	48,925	$	71,925	$	1,778.50	+	4.9%	$	48,925	$	77,850	$	113,850	$	2,728.00	+	4.9%	$	77,850	$	74,400	$	110,400	$	2,728.00	+	4.9%	$	74,400
$	71,925	$	131,925	$	2,905.50	+	4.9%	$	71,925	$	113,850	$	213,850	$	4,492.00	+	4.9%	$	113,850	$	110,400	$	210,400	$	4,492.00	+	4.9%	$	110,400
$	131,925	$	216,925	$	5,845.50	+	4.9%	$	131,925	$	213,850	$	328,850	$	9,392.00	+	4.9%	$	213,850	$	210,400	$	325,400	$	9,392.00	+	4.9%	$	210,400
$	216,925		and over	$ 10,010.50		+	5.9%	$	216,925	$	328,850		and over	$ 15,027.00		+	5.9%	$	328,850	$	325,400		and over	$ 15,027.00		+	5.9%	$	325,400

								Table 8 - If the Payroll Period with Respect to an Employee is DAILY or MISCELLANEOUS
(a) SINGLE person										(b) MARRIED person										(c) HEAD of HOUSEHOLD person
If the amount					The amount of state					If the amount					The amount of state					If the amount					The amount of state
of wages is:					tax withheld shall be:					of wages is:					tax withheld shall be:					of wages is:					tax withheld shall be:
Not Over		$	26.60		$0.00					Not Over		$	53.30		$0.00					Not Over		$	40.00		$0.00
Over:		But not over:					of excess over -			Over:		But not over:					of excess over -			Over:		But not over:					of excess over -
$	26.60	$	47.80				1.7%	$	26.60	$	53.30	$	84.00				1.7%	$	53.30	$	40.00	$	70.80				1.7%	$	40.00
$	47.80	$	68.90	$	0.36	+	3.2%	$	47.80	$	84.00	$	114.80	$	0.52	+	3.2%	$	84.00	$	70.80	$	101.50	$	0.52	+	3.2%	$	70.80
$	68.90	$	88.20	$	1.04	+	4.7%	$	68.90	$	114.80	$	145.60	$	1.51	+	4.7%	$	114.80	$	101.50	$	132.30	$	1.51	+	4.7%	$	101.50
$	88.20	$	126.60	$	1.94	+	4.9%	$	88.20	$	145.60	$	207.10	$	2.95	+	4.9%	$	145.60	$	132.30	$	193.80	$	2.95	+	4.9%	$	132.30
$	126.60	$	188.20	$	3.83	+	4.9%	$	126.60	$	207.10	$	299.40	$	5.97	+	4.9%	$	207.10	$	193.80	$	286.20	$	5.97	+	4.9%	$	193.80
$	188.20	$	276.60	$	6.84	+	4.9%	$	188.20	$	299.40	$	437.90	$	10.49	+	4.9%	$	299.40	$	286.20	$	424.60	$	10.49	+	4.9%	$	286.20
$	276.60	$	507.40	$	11.18	+	4.9%	$	276.60	$	437.90	$	822.50	$	17.28	+	4.9%	$	437.90	$	424.60	$	809.20	$	17.28	+	4.9%	$	424.60
$	507.40	$	834.30	$	22.48	+	4.9%	$	507.40	$	822.50	$ 1,264.80		$	36.12	+	4.9%	$	822.50	$	809.20	$ 1,251.50		$	36.12	+	4.9%	$	809.20
$	834.30		and over	$	38.50	+	5.9%	$	834.30	$	1,264.80		and over	$	57.80	+	5.9%	$	1,264.80	$	1,251.50		and over	$	57.80	+	5.9%	$	1,251.50

FYI-104 REV.11/2022 Page 8

New Mexico Taxation and Revenue Department

TAXPAYER INFORMATION

General Information. FYIs and Bulletins present general information with minimum technical language. All FYIs and Bulletins are free of charge and available through all local tax offices and on the Taxation and Revenue Department’s website at http://www.tax.newmexico.gov/forms-publications.aspx

Regulations. The Department establishes regulations to interpret and exemplify the various tax acts it administers. Current statutes with regulations can be located on the Departments website for free at http://www.tax.newmexico.gov/statutes-with-regulations.aspx. Specific regulations are also available at the State Records Center and Archives or on its web page at http://www.srca.nm.gov/

The Taxation and Revenue Department regulation book is available for purchase from the New Mexico Compilation Commission. Order regulation books directly from the New Mexico Compilation Commission at https://www.nmcompcomm.us/

Rulings. Rulings signed by the Secretary and approved by the Attorney General are written statements that apply to one or a small number of taxpayers. A taxpayer may request a ruling (at no charge) to clarify its tax liability or responsibility under specific circumstances. The Department will not issue a ruling to a taxpayer who is undergoing an audit, who has an outstanding assessment, or who is involved in a protest or litigation with the Department over the subject matter of the request. The Department’s rulings are compiled and available on free of charge at http://www.tax.newmexico.gov/rulings.aspx.

The request for a ruling must be in writing, include accurate taxpayer identification and the details about the taxpayer’s situation, and be addressed to the Secretary of the Taxation and Revenue Department at P.O. Box 630, Santa Fe, NM 87504-0630. The taxpayer’s representative, such as an accountant or attorney, may request a ruling on behalf of the taxpayer but must disclose the name of the taxpayer. While the Department is not required to issue a ruling when requested to do so, every request is carefully considered.

The Secretary may modify or withdraw any previously issued ruling and is required to withdraw or modify any ruling when subsequent legislation, regulations, final court decisions or other rulings invalidate a ruling or portions of a ruling.

Public Decisions & Orders. All public decisions and orders issued since July 1994 are compiled and available on the Department’s web page free of charge at http://www.tax.newmexico.gov/tax-decisions- orders.aspx.

This publication provides general information. It does not constitute a regulation, ruling, or decision issued by the Secretary of the New Mexico Taxation and Revenue Department. The Department is legally bound only by a regulation or a ruling [7-1-60, New Mexico Statutes Annotated, 1978]. In the event of a conflict between FYI and statute, regulation, case law or policy, the information in FYIs is overridden by statutes, regulations and case law. Taxpayers and preparers are responsible for being aware of New Mexico tax laws and rules. Consult the Department directly if you have questions or concerns about information provided in this FYI.

FYI-104  REV. 11/2022  page 9

New Mexico Taxation and Revenue Department

FOR FURTHER ASSISTANCE

Tax District Field Offices and the Department’s call center can provide full service and general information about the Department's taxes, taxpayer access point, programs, classes, and forms. Information specific to your filing situation, payment plans and delinquent accounts.

TAX DISTRICT FIELD OFFICES

ALBUQUERQUE

10500 Copper Pointe Avenue NE Albuquerque, NM 87123

SANTA FE

Manuel Lujan Sr. Bldg.

1200 S. St. Francis Dr.

Santa Fe, NM 87504

FARMINGTON

3501 E. Main St., Suite N

Farmington, NM 87499

LAS CRUCES

2540 S. El Paseo Bldg. #2

Las Cruces, NM 88004

ROSWELL

400 Pennsylvania Ave., Suite 200 Roswell, NM 8820

For forms and instructions visit the Department’s web site at http://www.tax.newmexico.gov

Call Center Number:

1-866-285-2996

If faxing something to a tax district field office, please fax to:

Call Center Fax Number:

1-505-841-6327

If mailing information to a tax district field office, please mail to:

Taxation and Revenue Department

P.O. Box 8485

Albuquerque, NM 87198-8485

For additional contact information please visit the Department’s website at http://www.tax.newmexico.gov/contact-us.aspx

This information is as accurate as possible as of the date specified on the publication. Subsequent legislation, new state regulations and case law may affect its accuracy. For the latest information please check the Taxation and Revenue Department’s web site at www.tax.newmexico.gov.

FYI-104  REV. 11/2022  page 10

↓ PDF File

File Specifics

#	Fact	Description
1	Effective Date	New Mexico Withholding Tax rules effective from January 1, 2022.
2	Use of Federal W-4 Forms	New Mexico does not require a state-specific W-4 form. Employees may use the Federal Form W-4 for New Mexico withholding tax purposes.
3	Adjustments for Allowances	Adjustments to New Mexico withholding due to allowances on pre-2020 Federal Form W-4 are no longer made.
4	Withholding Tables Update	The withholding tables have been updated to reflect changes and no longer incorporate withholding allowance deduction amounts.
5	Who Must Withhold	Employers who withhold federal income tax must also withhold New Mexico income tax, with limited exceptions for certain nonresident employees.
6	Reporting and Paying Withholding Taxes	After July 1, 2021, New Mexico withholding tax is reported using TRD-41414, Wage Withholding Tax Return or TRD-41409 for non-wage.
7	Withholding on Gambling Winnings	Operators of gambling establishments must withhold 6% from winnings for state purposes if also withholding for federal purposes.
8	Annual Withholding Statements	Filers must submit annual withholding statements by the last day of January for wages, pensions, annuities, or gambling winnings.
9	Special Withholding Cases	There are special instructions for withholding from irregular wages, supplemental income, and fringe benefits.
10	Electronic Submission Requirement	Starting tax year 2019, electronic submittal of income and withholding information returns is required for employers with 25 or more employees.

How to Use New Mexico Withholding

New Mexico's approach to withholding tax takes cues from federal standards but carves its own path to ensure the state's needs and laws are met. Employees and employers alike must navigate these waters to ensure the right amounts are withheld, balancing contributions without tipping the scale too much in either direction. Employers are key players in this process, tasked with understanding both the wider implications of federal changes and the nuances of state-specific requirements. This guide walks through the essential steps of filling out the New Mexico Withholding tax form, aiming to simplify an otherwise complex process.

Start with an understanding that while New Mexico does not have a direct state equivalent to the Federal W-4 form, employees should ideally use this form, marked "For New Mexico State Withholding Only" for New Mexico’s purposes.
Consider the employee's exempt income, which could affect their withholding requirements, ensuring you understand who might be exempt from New Mexico withholding tax.
Determine the amount to withhold by referring to the New Mexico State Wage Withholding Tax Tables for the Percentage Method of Withholding. You'll find this starting on page 5 of the FYI-104 form.
Calculate the withholding amount based on the employee's taxable wage payment, payroll period, and filing status, incorporating any additional withholding amounts the employee might have requested.
Prepare to report and pay New Mexico withholding taxes. Remember, the required forms and processes changed after July 1, 2021, with submissions now made through specific online systems or forms depending on the type of withholding.
Make sure any tax due is paid on time, specifically by the 25th of the month following the end of the reporting period, to avoid any penalties for late filing or payment.
If you need to update your business address or cancel your New Mexico Business Tax ID, you'll need to fill out and submit Form ACD-31015, keeping in mind that your obligation to report doesn't automatically cease upon stopping business operations or payroll.
Take note that child support withholding does not need to be reported to the Taxation and Revenue Department but to the Human Services Department instead.
For federal withholding that uses the cumulative method, you may apply the same for New Mexico state withholding.
Encourage adjustments to withholding if employees have additional amounts withheld federally and may benefit from similar adjustments at the state level.

Stepping through these actions with attention to detail and a keen eye on due dates ensures compliance, preventing any undue tax obligations or discrepancies down the line. It's more than a routine task; it's a critical component of ensuring employees and employers alike meet their tax responsibilities accurately and efficiently.

Understanding New Mexico Withholding

What changed with the New Mexico withholding due to the federal W-4 form updates in 2020?

Beginning in 2020, adjustments to New Mexico withholding are no longer made based on the number of allowances claimed on pre-2020 Federal Form W-4. Despite these changes, employees can still use any version of the Federal W-4 form for New Mexico withholding. It’s also important for the New Mexico state withholding tables to be applied regardless of the W-4 version used.
Is there a state equivalent to the Federal W-4 form for New Mexico withholding?

No, New Mexico does not have a state-specific equivalent of the Federal W-4 form. Employees should use the federal form, marking it "For New Mexico State Withholding Only" at the top. This is for the convenience of both employer and employee, though not mandatory. Employers should retain this marked W-4 in the employee's personnel file.
Who must withhold New Mexico income tax?

Every employer who withholds a portion of an employee’s wages for federal income tax must also withhold for New Mexico income tax. This includes employers of some agricultural workers, gambling establishments on payouts, and payers of pension and annuity income when requested. There are exceptions, such as for certain nonresident employees and those making less than a specified amount.
How should the New Mexico withholding tax be calculated and reported?

The withholding tax is calculated using the state wage withholding tax tables. Reporting and payment of the New Mexico withholding tax have transitioned to either TRD-41414, Wage Withholding Tax Return or TRD-41409, Non-Wage Withholding Tax Return forms post-July 1, 2021. Taxes are due by the 25th of the month following the reporting period, with filing available online.
Can employees choose to have additional amounts withheld from their paycheck?

Yes, employees can request additional withholding amounts for New Mexico state tax purposes on their W-4. This might be a consideration for employees to align their withholdings more closely with their expected state tax liability.
How are withholding taxes for gambling winnings handled?

Operators of gambling establishments must withhold 6% from gambling winnings for state tax purposes. This applies to both residents and nonresidents if the operator is also required to withhold or report for federal tax purposes.
What are the requirements for annual withholding statements and reconciliation?

Entities that have withheld state tax on wages, pensions, annuities, or gambling winnings must file an annual statement of withholding by the last day of January for each recipient. While electronic submission of these statements is required for employers with 25 or more employees, Annual Reconciliation through Form RPD-41072 is optional but recommended for reconciling payments with withholdings.

Common mistakes

When completing the New Mexico Withholding form, accurately filling out the required information is crucial to ensure the correct amount of tax is withheld from your income. However, individuals often make errors that can lead to complications or discrepancies in their tax withholdings. Here are six common mistakes to avoid:

Not using the New Mexico state withholding tables for calculations.
Instead of using the specific New Mexico state withholding tables provided in the publication, some individuals mistakenly use federal withholding tables or outdated state tables, leading to incorrect withholding amounts.
Incorrect filing status or incorrect withholding allowances.
Choosing the wrong filing status or incorrectly calculating the number of withholding allowances, especially when using pre-2020 Federal Form W-4, can significantly affect the amount withheld.
Omission of additional withholding requests.
Employees who want additional amounts withheld from their paycheck for New Mexico state tax purposes must specify this on their W-4 but sometimes fail to do so, leading to lower withholdings than desired.
Failing to adjust withholdings after significant life changes.
Not updating withholding information after major life events such as marriage, divorce, or the birth of a child can result in the incorrect calculation of tax liabilities.
Not properly indicating exempt income.
Employees who have exempt income, such as Native Americans working on tribal land, sometimes forget to mark their income as "exempt" on the W-4, leading to unnecessary withholdings.
Errors in basic information.
Simple mistakes like incorrect Social Security numbers, wrong addresses, or misspelled names can create issues with the Taxation and Revenue Department's ability to accurately record and apply withholdings to the individual's state tax obligations.

Avoiding these mistakes is crucial for ensuring that the correct amount of taxes is withheld, thereby avoiding potential underpayment penalties or the unexpected need to pay a lump sum when filing your New Mexico personal income tax return.

Documents used along the form

When managing payroll and handling New Mexico Withholding Tax, employers and employees often encounter a variety of forms and documents beyond the New Mexico Withholding Tax form (FYI-104). Understanding these documents ensures compliance with both state and federal regulations, streamlining the payroll process.

IRS Form W-4: Used by employees to determine the amount of federal income tax withholding from their pay. While New Mexico doesn’t have a state-specific W-4, the federal form is used for state withholding purposes, with a notation for state use.
TRD-41414, Wage Withholding Tax Return: Employers file this form to report income taxes withheld from their employees' wages in New Mexico following the period starting July 1, 2021.
TRD-41409, Non-Wage Withholding Tax Return: This document is for reporting and paying withholding tax on non-wage incomes like pensions, annuities, and gambling winnings, applicable after July 1, 2021.
ACD-31015, Business Tax Registration Update Form: Used to update business information or cancel a New Mexico Business Tax Identification Number. It ensures the state has current data on the employer.
RPD-41072, Annual Summary of Withholding Tax: Although not mandatory, this form helps reconcile the amounts withheld as shown on individual withholding statements with the total tax paid to the state.
Form PIT-ES, Estimated Tax Payment Voucher: For individuals, including those who are self-employed, who need to make quarterly estimated tax payments to New Mexico.
Form W-2, Wage and Tax Statement: Employers provide this annual statement to employees and the IRS to report wages, taxes withheld, and other compensation.
Form 1099-R: Distributors of retirement benefits use this form to report distributions from pensions, annuities, retirement plans, or profit-sharing plans.
Form 1099-MISC: Miscellaneous Income form is used to report payments made to non-employees, such as independent contractors, for services rendered to a business.
Form CRS-1: Used by businesses to report and pay gross receipts tax, compensating tax, and withholding tax, applicable before July 1, 2021.

Each document plays a critical role in the payroll and tax reporting process. Employers and their employees must be familiar with these forms to ensure accurate tax withholding, timely payments, and compliance with reporting requirements. This careful attention to detail helps maintain the integrity of the payroll system, ensuring all parties fulfill their tax obligations efficiently and effectively.

Similar forms

The New Mexico Withholding Tax form is similar to the Federal Form W-4 in several critical aspects. Both forms play a pivotal role in determining the amount of income tax to be withheld from an employee's paycheck. The Federal Form W-4, commonly known as the Employee's Withholding Certificate, allows employees to estimate their federal income tax withholding. Similarly, although New Mexico does not have its own state-specific W-4 form, employees use the Federal Form W-4 to guide the withholding for New Mexico state income tax. Employees designate their filing status and withholding allowances on these forms, which employers then use to determine the amount of federal and state income tax to withhold based on IRS and New Mexico Taxation and Revenue Department tables, respectively. After changes in 2020, the forms no longer calculate allowances the same way, but the principle remains that the W-4 form's purpose is to inform withholding calculations, directly impacting both federal and New Mexico tax withholdings.

The New Mexico Withholding Tax form also shares similarities with the TRD-41414, Wage Withholding Tax Return form and the TRD-41409, Non-Wage Withholding Tax Return form. The core similarity lies in their use for reporting and paying the taxes withheld. Prior to July 2021, the New Mexico Withholding tax was reported along with gross receipts and compensating tax on the Form CRS-1. However, after July 1, 2021, the state transitioned to using the TRD-41414 for employee wage withholdings and the TRD-41409 for other types of income, such as gambling winnings. These forms are integral to the process of reconciling the tax withheld from income with the actual tax owed to the New Mexico Taxation and Revenue Department. Employers and other entities report the amount of tax they've withheld over a period using these forms, which ensures the correct amount of tax is remitted to the state, paralleling the purpose of the New Mexico Withholding Tax form in capturing and directing withheld funds to their necessary state tax obligations.

Dos and Don'ts

When completing the New Mexico Withholding Tax Form, understanding what to do and what not to do can simplify the process and help ensure compliance with state tax laws. Below are key points to consider:

Do use the New Mexico withholding tables for the percentage method of withholding as found in the FYI-104 publication to accurately calculate withholding amounts.
Do not adjust New Mexico withholding based on the number of allowances on a pre-2020 Federal Form W-4, as allowances no longer affect New Mexico withholding.
Do ensure that if using a pre-2020 Federal Form W-4 for New Mexico withholding purposes, the correct number of withholding allowances is used.
Do not withhold New Mexico income tax from wages of nonresident employees working in New Mexico for 15 or fewer days during the calendar year.
Do complete a copy of the Federal Form W-4 for New Mexico withholding purposes, marking it clearly with "For New Mexico State Withholding Only."
Do not neglect to withhold New Mexico income tax from gambling winnings, as required by New Mexico law. Ensure to use the appropriate rate of 6% for withholding.
Do report and pay New Mexico withholding tax using the correct form, TRD-41414 for wage withholding and TRD-41409 for non-wage withholding, depending on the source of income.
Do not forget to file an annual withholding statement for each employee, pension or annuity recipient, or gambling winner, using the state copy of the relevant federal income and withholding statements or any substitute form acceptable to the IRS that reflects the required New Mexico information.

By adhering to these dos and don'ts, employers can properly manage the complexities of New Mexico's withholding requirements and avoid common pitfalls, ensuring compliance with state tax obligations.

Misconceptions

Understanding the New Mexico Withholding Tax form and its instructions can sometimes be complicated, leading to misconceptions. Here, we aim to clarify some of these misunderstandings to help both employers and employees navigate their tax responsibilities more effectively.

Misconception 1: Employees must adjust their New Mexico withholding based on the number of allowances on the Federal Form W-4.

Since 2020, adjustments to New Mexico withholding because of the number of allowances are not necessary. While allowances are no longer applicable on the Federal Form W-4 post-2019, New Mexico withholding calculations have been adjusted accordingly.
Misconception 2: New Mexico has a state-specific form for withholding purposes.

Unlike some states, New Mexico does not have its own W-4 form. Instead, employees should use the Federal Form W-4, clearly indicating "For New Mexico State Withholding Only," to guide their employers on withholding amounts.
Misconception 3: All income is subject to New Mexico withholding tax, with no exceptions.

Certain types of income, such as income earned by Native Americans on their tribal land and military pay for active duty service members, are exempt from New Mexico withholding tax.
Misconception 4: Employers are not required to withhold New Mexico income tax from nonresident employees.

Employers must withhold New Mexico income tax for nonresident employees who work in the state, except when the nonresident works less than 16 days in a calendar year or qualifies for other specific exemptions.
Misconception 5: Withholding amounts are at the discretion of the employer.

The amount to withhold is clearly defined by the New Mexico State Wage Withholding Tax Tables and is not subject to employer discretion. Employers must follow these tables to determine the correct withholding amount based on wages and filing status.
Misconception 6: Reporting and paying New Mexico withholding taxes is a complicated process requiring paper forms.

Employers have the option to file and pay New Mexico withholding taxes online, simplifying the process and reducing the need for paper forms.
Misconception 7: Withholding on gambling winnings is optional.

Operators of gambling establishments are required to withhold a percentage of gambling winnings for both residents and nonresidents, mirroring federal withholding requirements.
Misconception 8: Year-end reconciliation of withholding taxes is optional.

While New Mexico provides a form for the annual reconciliation of withholding taxes, it is essential for ensuring the accuracy of withheld amounts throughout the year.
Misconception 9: Employers can determine the amount of withholding without considering the employee's filing status or wages.

Employers must use the New Mexico State Wage Withholding Tax Tables to calculate the correct withholding amount, taking into account the employee's filing status and wages.
Misconception 10: The withholding tax rules are static and do not change.

Legislation, court decisions, and policy changes can alter the requirements and calculations for New Mexico withholding tax. Employers and employees should stay informed about any updates to ensure compliance.

Correcting these misconceptions is important for both employees and employers to ensure compliance with New Mexico's tax laws and to avoid potential penalties for incorrect withholding.

Key takeaways

Understanding the New Mexico Withholding Tax can be critical for both employers and employees. This guide aims to break down the key elements of filling out and using the New Mexico Withholding Form, in line with recent changes and requirements.

Changes to Federal Form W-4: With the revised Federal Form W-4 in 2020, New Mexico employees no longer adjust state withholding based on allowances. They may use any version of the Federal W-4 for state withholding purposes but should annotate it for New Mexico use specifically.
Employer Requirement: Employers must withhold New Mexico income tax for any employee from whom they withhold federal income tax, with few exceptions.
Amount to Withhold: Employers should refer to the New Mexico State Wage Withholding Tax Tables, utilizing the percentage method for determining the amount of state tax to withhold from employees’ wages.
Reporting and Payment: Post-July 1, 2021, the Wage Withholding Tax Return (TRD-41414 for wages or TRD-41409 for non-wage payments) should be used for reporting and payments, which are due monthly.
Additional Withholding: Employees may request additional withholding on the New Mexico-specific W-4 form for state tax purposes to cover potential tax liabilities.
Withholding on Gambling Winnings: A 6% tax must be withheld from gambling winnings, for both state residents and nonresidents, if the winnings are subject to federal withholding requirements.
Annual Withholding Statements: Employers are required to file an annual statement of state tax withheld using federal forms or acceptable substitutes that include necessary information such as the amount of New Mexico income and the withholding.
Use of Federal Withholding Methods: New Mexico allows employers to use the same method for state withholding as they do for federal withholding, whether it's for regular wages, supplemental wages, or fringe benefits.
Special Situations: There are cases where federal and state withholding will differ. For instance, income exempt from New Mexico tax (such as certain Native American incomes) doesn't require state withholding. Employers should be aware of these distinctions.

Moreover, it is recommended that employers communicate any significant withholding changes to their employees, especially considering the adjustments in federal and state tax legislation. Keeping abreast of these changes ensures compliance and helps manage employees' expectations regarding their net pay and potential tax liabilities.

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