New Mexico vs Arizona: Tax & Cost Comparison
2026Side-by-side New Mexico vs Arizona comparison: state income tax, sales tax, property tax, cost of living, and minimum wage for 2026. Southwest pair — NM's progressive 1.7%-5.9% + Gross Receipts Tax (5.875%-9%) against AZ's 2.5% flat + standard sales tax.
Written and reviewed by Konstantin Iakovlev · Methodology · Updated
Disclaimer: This calculator is for informational purposes only and does not constitute tax, financial, or legal advice. Results are estimates based on the information you provide and current rates. Always consult a qualified tax professional or financial advisor for advice specific to your situation.
| Tax / Cost Factor | New Mexico | Arizona |
|---|---|---|
| State income tax (top rate) | 5.90% (progressive) | 2.50% (flat) |
| State sales tax | 4.88% | 5.60% |
| Avg. effective property tax | 0.67% | 0.54% |
| Minimum wage (2026) | $12.00/hr | $15.15/hr |
| State Disability Insurance (SDI) | No | No |
| Paid Family Leave | No | No |
| Median home price (Q4 2025) | $320,000 | $437,000 |
| Foreclosure type | judicial | non-judicial |
| BEA Regional Price Parity (2024) | 91.7 | 102.6 |
| Median household income (2024) | $58,300 | $73,450 |
| Median 2-bedroom rent (Q4 2025) | $1,240/mo | $1,690/mo |
Worked example: $75,000 single filer, 2026
For a single filer earning $75,000 in 2026, the rough state-tax burden comparison:
- New Mexico: estimated state income tax ≈ $3,098, plus federal income tax (≈ $7,300 at 22% marginal), FICA $5,738, sales tax 4.88% on consumption.
- Arizona: estimated state income tax ≈ $1,313, plus federal $7,300, FICA $5,738, sales tax 5.60% on consumption.
Property tax depends entirely on home value. On a $400,000 home: New Mexico ≈ $$2,680/year; Arizona ≈ $$2,160/year.
Combined annual state burden (income + property on $400K + 6% of $50K consumption sales tax) — New Mexico: ~$8,216; Arizona: ~$6,273.
Why this comparison? Southwest pair — NM's progressive 1.7%-5.9% + Gross Receipts Tax (5.875%-9%) against AZ's 2.5% flat + standard sales tax.
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New Mexico
Frequently asked questions
Which is cheaper to live in: New Mexico or Arizona?
By BEA Regional Price Parity (2024), New Mexico has a cost-of-living index of 91.7 and Arizona is 102.6 (US average = 100). Median household income: New Mexico $58,300, Arizona $73,450. Median 2-bedroom rent: New Mexico $1,240/mo, Arizona $1,690/mo. New Mexico is the lower-cost state by this measure.
Does New Mexico or Arizona have lower income tax in 2026?
Arizona has a top income-tax rate of 2.50%; New Mexico has 5.90%. Arizona is lower at the top bracket.
What about property taxes in New Mexico vs Arizona?
New Mexico's average effective property tax rate is 0.67% (e.g., $2,680/year on a $400,000 home). Arizona's rate is 0.54% ($2,160/year on $400K). Arizona has the lower property tax burden.
Where is the minimum wage higher: New Mexico or Arizona?
New Mexico's 2026 minimum wage is $12.00/hour; Arizona's is $14.85/hour. Arizona is higher.