Updated October 4, 2026. Quick answer: Yes, after a deduction. The 2025 PIT-ADJ instructions allow the greater of “100% of your net capital gains, not to exceed $2,500; or” “40% of up to $1,000,000 of your net capital gain income” from the sale of a New Mexico business. Short-term gains do not qualify.
Selling your home? How the state taxes the profit, from its own tax documents: Does New Mexico tax the profit from selling your home?.
The same question for dividends and interest: does New Mexico tax dividends and interest.
How New Mexico treats capital gains
| Item | What the documents say |
|---|---|
| Treatment | Net capital gain minus the greater of two deductions, then taxed at the graduated rates |
| Deduction | Greater of 100% of net capital gains up to $2,500, or 40% of up to $1,000,000 of net capital gain income from the sale of a business allocated or apportioned to New Mexico |
| Rates, single, from House Bill 252 (2024) | 1.5% to $5,500; 3.2% to $16,500; 4.3% to $33,500; 4.7% to $66,500; 4.9% to $210,000; 5.9% over $210,000. The posted bill text does not show whether it was enacted, and the 2025 instructions read do not print the table |
| Short-term gains | “do not include short-term capital gains” |
A $50,000 long-term gain
A $50,000 long-term gain that is not from the sale of a business gets the $2,500 deduction: $50,000 minus $2,500 = $47,500 taxable. At the lowest bill rate, computed as $47,500 x 1.5% = $712.50; at the top rate, computed as $47,500 x 5.9% = $2,802.50.
If the gain is from the sale of a New Mexico business, 40% is deducted instead, which leaves $30,000 taxable.
What changes in 2026
The documents read print no 2026 rate or change.
Federal rules
The state’s treatment sits on top of the federal one. The IRS explains the federal tax on gains in Topic no. 409, Capital Gains and Losses and Publication 550, Investment Income and Expenses.
Related: whether New Mexico taxes pensions, how New Mexico taxes retirement income, the capital gains tax by state table, and the federal capital gains tax calculator.
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Answer againSources
- Instructions for 2025 PIT-ADJ: https://realfile.tax.newmexico.gov/2025pit-adj-ins.pdf
- Instructions for 2025 PIT-1 New Mexico Personal Income Tax Return: https://realfile.tax.newmexico.gov/2025pit-1-ins.pdf
- House Bill 252 (2024) Adjusting Individual Income Tax Brackets and Rates (Section 7-2-7 NMSA 1978): https://www.nmlegis.gov/Sessions/24%20Regular/bills/house/HB0252.PDF
- House Bill 37 (2024) as introduced, Section 7-2-34 NMSA 1978 net capital gain deduction: https://www.nmlegis.gov/Sessions/24%20Regular/bills/house/HB0037.HTML
Sources: the primary documents linked above, read on October 4, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.