The New Mexico bonus tax calculator at the top of this page helps employers quickly estimate employee take-home pay (also known as net pay) for bonuses. When applicable, it uses New Mexico’s flat 5.9% withholding rate for supplemental wages.
Behind the numbers
Behind the numbers
Updated: July 12, 2025
Does New Mexico tax bonuses?
Yes. Bonuses are considered taxable income and are subject to New Mexico’s state income tax. The state follows the same method used for federal withholding on supplemental wages.
If the employer uses the federal flat rate of 22% for withholding on the bonus, they may also apply a flat 5.9% state withholding rate. If a different federal method is used (like the aggregate method), the same method should be applied for state withholding.
How to calculate bonus tax in New Mexico
Employers have two options based on how the bonus is paid and how federal tax is calculated:
- If using the federal flat 22% supplemental rate, employers may withhold a flat 5.9% for state tax.
- If using the aggregate method for federal tax, employers must calculate state withholding using New Mexico’s standard withholding tables, based on the employee’s W-4 information.
How can employers in New Mexico pay bonuses to employees?
Bonuses can be paid via:
- Check
- Direct deposit
- Pay card
How do bonuses work in New Mexico?
Bonuses are included in gross income and reported on W-2s. Employers apply standard withholding methods.
Why are bonuses taxed differently than standard pay?
They aren’t — New Mexico includes bonuses with total taxable wages for standard withholding.
What is the bonus tax rate in New Mexico?
New Mexico has progressive state income tax rates ranging from 1.7% to 5.9%, depending on income.
How much tax is taken out of a bonus in New Mexico?
- Federal: 22% (if paid separately using the flat rate)
- New Mexico: Up to 5.9% (or 5.9% flat if applicable)
- Combined: Up to 27.9%, plus any other payroll deductions