New Mexico tips tax calculator after HB 264
New Mexico came close to mirroring the federal deduction — HB 264 would have deducted exactly the amount allowed under 26 U.S.C. 224 — but the bill died in 2026, so tips stay in New Mexico income.
What HB 264 said
The 2026 bill defined “qualified tips” by reference to 26 U.S.C. 224(d) and allowed a New Mexico deduction equal to the federal one, reported as the Department required. It died before passage. New Mexico starts from federal AGI, so without it tips remain taxable for 2025 and 2026.
New Mexico figures
| Cash wage / minimum | $3.00 / $12.00 |
|---|---|
| In force | July 1, 2026 |
| Next change | none scheduled |
| Tipped threshold | More than $30 a month in tips |
| Tips on the 2025 return | tips stay taxable in this state. New Mexico starts from federal AGI, which includes tips; no state deduction existed for 2025. Source: New Mexico Legislature |
| Tips on the 2026 return | tips stay taxable in this state. HB 264 (2026), which would have mirrored the federal deduction, died. Source: New Mexico Legislature |
$3.00 since 2023
The Department of Workforce Solutions lists $12.00 an hour and $3.00 for tipped employees, unchanged since January 1, 2023 because New Mexico does not index its minimum. Several cities set higher local rates, and the state counts a worker as tipped above $30 a month in tips.
A Santa Fe server
Federally the $19,000 deduction saves $2,150; New Mexico taxes the tips. Thirty hours at $3.00 plus $150 of tips leaves $120 of make-up owed against $360.
Check a New Mexico workweek
Where these figures come from
- New Mexico Taxation and Revenue Department · New Mexico Department of Workforce Solutions
- HB 264 (2026) — Income tax deduction for qualified tips (status: Died) (2026)
- Minimum Wages for Tipped Employees (table by state) (2026-07-01)
- Minimum Wage Information (2026)
Federal rules: how the deduction works. Nearby: Arizona, Colorado, Oklahoma, Texas.
Figures verified against primary sources on