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Your Ultimate Guide to US Payroll in New Mexico

Managing payroll in Nevada? Read our state-by-state guide to US payroll taxes to learn what you must withhold and deduct from employee wages.

Gabriele Culot
Written by Gabriele Culot
July 26, 2023
Contents
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Key takeaways

  1. Companies with employees in New Mexico will have to contribute to New Mexico’s state unemployment insurance.
  2. You’ll have to withhold state personal income taxes for employees working in New Mexico.
  3. When you hire one employee in New Mexico, you’ll need to start paying for workers’ compensation insurance in New Mexico.

Employers must navigate various regulations and requirements to ensure proper payroll withholding in each US state. On top of withholding federal taxes such as Medicare and Social Security taxes, you are also responsible for withholding and paying certain New Mexico state taxes from your employee’s payroll. These taxes together are referred to as employer payroll taxes or payroll withholding. 

This guide introduces what employers need to pay and withhold from payroll in New Mexico, including unemployment insurance, personal income tax, and workers’ compensation. 

Paying Unemployment Insurance 

Unemployment Insurance (UI) is a national program administered by the US Department of Labor and provides temporary payments to people who are unemployed through no fault of their own. Although UI is a joint state-federal program to help unemployed individuals, employers in New Mexico must contribute to state unemployment insurance. You can manage your New Mexico unemployment insurance through an easy-to-use online portal.

For more information on paying your unemployment insurance, the New Mexico Department of Workforce Solutions provides multiple resources, including updates to regulations and an employer activation guide

Withholding Personal Income Tax from your New Mexico Employee 

Personal Income Tax, also known as individual income tax or state income tax, is a tax on the income of New Mexico residents. The tax is deducted from the employee’s wages and is withheld by the employer. After you withhold the tax from your employee, you are responsible for paying the amount you withheld to the state. You can pay the withheld amount through New Mexico’s Taxpayer Access Point online portal.

For more information on paying the withholding amount, the New Mexico Tax and Revenue Department provides breakdowns explaining how much employers should withhold and the forms employers will need to complete.

Paying your New Mexico Workers’ Compensation 

On top of paying your New Mexico payroll taxes, you will also need to pay for workers’ compensation in the state. Workers’ compensation is insurance to provide care for an employee who gets injured while performing their job. Employers are required to pay for workers’ compensation in New Mexico even if you only have one employee living there.

Businesses can purchase workers’ compensation insurance from a qualified commercial carrier in the state. The New Mexico Worker’s Compensation Administration explains the three types of coverage offered in the state and resources to help you find a qualified commercial carrier. New Mexico also requires you to pay a workers’ compensation assessment on top of the premiums you pay for your workers’ compensation to your private insurance carrier, which you can learn more about on the Worker’s Compensation Administration website. You can pay the workers’ compensation assessment through New Mexico’s Taxpayer Access Point.

Please be sure that you verify that your workers’ compensation insurance is compliant with the state’s regulations for workers’ compensation.

Simplify US payroll tax compliance with Deel

While this guide provides essential information on New Mexico payroll taxes, payroll compliance and state requirements extend beyond what is covered above. To streamline the process and ensure full compliance, companies can turn to Deel. 

Deel offers a comprehensive solution for managing US and international payroll, including payments, taxes, worker classification, and more. Speak with an expert today to see how you can streamline your US payroll processes and ensure compliance with state regulations.

Disclaimer: This article is provided for general informational purposes and should not be treated as legal or tax advice. Consult a professional before proceeding.

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