Easily manage employment in New Mexico

Payroll management in New Mexico

New Mexico has a diverse economy supported by industries such as energy, aerospace, technology, and agriculture. With state-specific payroll regulations, including a high minimum wage and progressive income tax, employers in New Mexico must ensure compliance with both state and federal payroll laws. Understanding these regulations is crucial for smooth payroll operations and compliance.

Payroll breakdown in New Mexico

Employers in New Mexico must adhere to both federal and state payroll regulations regarding wages, taxes, and benefits. Below is an overview of key payroll components:

Minimum wage and overtime

• Minimum wage: New Mexico’s minimum wage is $12.00 per hour, with higher rates in certain localities.
• Overtime rules:
• New Mexico follows federal overtime laws, requiring employers to pay 1.5 times an employee’s regular rate for hours worked beyond 40 hours in a workweek.
• Some exemptions apply based on job classification and industry.

State income tax

• New Mexico has a progressive state income tax system, with rates ranging from 1.7% to 5.9%, depending on income levels.
• Employers must withhold state income tax and remit it to the New Mexico Taxation and Revenue Department.

Unemployment insurance (UI) tax

• Employers must contribute to New Mexico’s Unemployment Insurance (UI) program, managed by the New Mexico Department of Workforce Solutions.
• The UI wage base in New Mexico is $30,100.
• UI tax rates vary based on an employer’s experience rating and range from 0.33% to 6.4%.
• New employers typically pay a 1.0% UI tax rate.

Workers’ compensation

• New Mexico law requires all employers with three or more employees to carry workers’ compensation insurance to cover medical expenses and lost wages for employees injured on the job.
• Construction employers are required to provide coverage even if they have only one employee.

Payroll tax filing and payment deadlines

• Employers must register for a New Mexico Employer Tax Account with the New Mexico Taxation and Revenue Department.
• State withholding tax returns must be filed monthly, quarterly, or annually, depending on employer classification.
• UI tax reports must be submitted quarterly to the New Mexico Department of Workforce Solutions.
• Payroll tax payments can be made electronically through the New Mexico TAP (Taxpayer Access Point) portal.

Quick facts: Important considerations for employers

• State minimum wage compliance: New Mexico’s minimum wage is higher than the federal rate, and some cities, such as Albuquerque, Las Cruces, and Santa Fe, have even higher local minimum wages.
• Final paycheck rules:
• If an employee is terminated, employers must provide the final paycheck within five days.
• If an employee resigns, the final paycheck must be provided by the next scheduled payday.
• New hire reporting: Employers must report new hires to the New Mexico New Hire Directory within 20 days.
• Paid sick leave: New Mexico’s Healthy Workplaces Act requires employers to provide one hour of paid sick leave for every 30 hours worked, up to 64 hours per year.
• Payroll recordkeeping: Employers must maintain payroll records for at least four years to comply with state and federal laws.
• Right-to-work state: New Mexico is not a right-to-work state, meaning employees may be required to join a union if applicable.

Run payroll in New Mexico with Remote

Managing payroll in New Mexico requires careful attention to state-specific regulations, including minimum wage compliance, UI tax requirements, and workers’ compensation laws. Employers must stay informed about tax rates, wage laws, and reporting deadlines to ensure smooth payroll processing and avoid penalties.

The good news is, you can pay anyone, anywhere — from your team in the office to your team abroad, all with Remote Payroll. To see just how easy global payroll can be, book a demo with Remote today.