Lottery winnings tax in New Mexico
New Mexico taxes lottery winnings as ordinary income at graduated rates from 1.5% to 5.9%.
Updated · 2026 tax rules · How we calculate
You keep
$37,245
Cash at payout
$35,000
Total tax
$12,755
Over-withheld
$2,245
- Form W-2G
- Yes
- Federal withholding at payout
- $12,000
- Federal tax on the winnings
- $10,350
- State tax
- $2,405
- New Mexico withholding at payout
- $3,000
- Over-withheld
- $2,245
- You keep
- $37,245
$50,000 is at or above the $2,000 reporting threshold, so the payer files a W-2G with the IRS and gives you a copy.
The payer holds back 24% of winnings over $5,000 and sends it to the IRS. It's a prepayment, not the final tax.
Winnings are ordinary income stacked on your other $60,000. Your top dollar lands in the 22% bracket.
New Mexico taxes gambling winnings as ordinary income.
New Mexico requires the payer to hold back 6% for state tax.
More was withheld than these winnings add to your tax. The difference reduces what you owe on the rest of your return, or comes back as a refund.
$50,000 minus $12,755 in federal and state tax: an effective rate of 25.5%.
An estimate for 2026, not tax advice. It treats this win as your only gambling income for the year and leaves out local income taxes. Nothing you enter leaves your browser.
The rules
- New Mexico tax
- New Mexico taxes lottery winnings as ordinary income at graduated rates from 1.5% to 5.9%.[1]
- Federal tax form
- Lottery prizes of $2,000 or more that are at least 300 times the ticket price are reported on a W-2G. The threshold was $600 before 2026.[2]
- Federal withholding
- 24% is withheld from lottery prizes of more than $5,000 (minus the ticket price). No 300x test applies to lotteries.[4]
- New Mexico withholding
- New Mexico withholds 6% on lottery winnings of $2,000 or more.[5]
- Gambling losses
- Gambling losses count only through your federal itemized deductions, which New Mexico copies from your Form 1040, so the 90% limit carries over.[6]
- Visitors
- New Mexico taxes nonresidents on lottery winnings won there, so visitors may need to file a nonresident return.[7]
- Where to play
- New Mexico runs a state lottery.[8]
What you keep at different amounts
For a single filer with $60,000 of other income and no gambling losses, living and winning in New Mexico.
| Won | W-2G | Withheld | Federal tax | State tax | You keep |
|---|---|---|---|---|---|
| $1,500 | No | $0 | $180 | $71 | $1,250 |
| $2,000 | Yes | $120 | $240 | $94 | $1,666 |
| $10,000 | Yes | $3,000 | $1,550 | $470 | $7,980 |
| $50,000 | Yes | $15,000 | $10,350 | $2,405 | $37,245 |
| $100,000 | Yes | $30,000 | $22,114 | $4,855 | $73,031 |
Assumes a $2 ticket price, so the 300x test is met at every amount shown.
Questions
- How much is New Mexico tax on lottery winnings?
- New Mexico taxes lottery winnings as ordinary income at graduated rates from 1.5% to 5.9%.[1]
- Does New Mexico withhold tax from lottery winnings?
- New Mexico withholds 6% on lottery winnings of $2,000 or more.[5]
- Do visitors pay New Mexico tax on lottery winnings?
- New Mexico taxes nonresidents on lottery winnings won there, so visitors may need to file a nonresident return.[7]
More for New Mexico
All of New Mexico's gambling tax rules · Lottery in every state
Sources
- [1] Tax Foundation, State Individual Income Tax Rates and Brackets, 2026 · checked September 22, 2026
- [2] IRS, Instructions for Forms W-2G and 5754 (01/2026) · checked September 22, 2026
- [3] Federal Register, REG-113229-25 proposed rule (Apr. 17, 2026) · checked September 22, 2026
- [4] 26 U.S. Code § 3402 (withholding) · checked September 22, 2026
- [5] FYI-104 New Mexico Withholding Tax (Rev. 11/2025, effective Jan 1, 2026) · checked September 22, 2026
- [6] 2025 PIT-1 Instructions, Line 12 · checked September 22, 2026
- [7] 2025 PIT-B Instructions, Line 7 · checked September 22, 2026
- [8] Fox Sports, Where is sports betting legal? · checked September 22, 2026