In New Mexico, is the state income tax deductible from one's federal tax obligation?

Question

I am considering moving to Ruidoso and am concerned about the state income tax being an added burden ON TOP of federal income tax. I am hoping that I can take a deduction for the state income tax and reduce my federal tax otherwise owed.

Answer 1

IF you itemize, it is considered, otherwise, NOT

Answer 2

If you itemize, state income tax from any state can be taken as an itemized deduction.  The amount is deducted from your income before the tax is calculated though, not directly from your tax.  Your federal tax savings will depend on your bracket.  So if you paid $800 in NM state income tax and are in a 15% federal bracket, your savings on your federal return IF you itemize could be $120.

Answer 3

If you itemize, you can deduct any state's income tax.

Answer 4

State income taxes are an itemized deduction from INCOME, not a direct reduction in your Federal income tax liability.