Tax or Mill Levy Rates
Tax rates are determined by The New Mexico Department of Finance & Administration (DFA)
There are 2 essential factors for determining a tax or mill levy rate:
- Taxable Assessed Value: First, DFA needs to know the value of the property to be taxed. The New Mexico Property Tax Division (PTD) prepares appraisals for all the state assessed or “centrally assessed” properties located in the county and they prepare the State Assessed Appraisal reports which are sent to the county Assessor. The county Assessor then submits a certified Appraisal and Tax Year Abstract to the New Mexico Property Tax Division (PTD). The Assessor’s Abstract specifies the total and net taxable values for every category of property located within the county. These reports must be sent to PTD by June 15 of every year. PTD then reviews the reports and forwards them to DFA.
- Revenues Demands of the County: Second, DFA needs to know how much revenue the tax must generate in order to meet the financial requirements for the entity receiving the funds. DFA receives and approves the budgets of each entity.
There are a number of complicated procedures that are added to this process. DFA includes another factor known as “yield control” to help prevent tax rates from increasing or decreasing too rapidly. The yield control, which applies to county valuation as a whole, but not to individual parcels, places a 5 percent increase limit on the amount of taxes local governments may receive from reappraisal. It does not place a cap on how much a particular property’s value may increase. It does place a cap on how much property tax local taxing agencies may receive. By limiting the annual amount of property taxes that can be collected, yield control limits the amount individual property owners will pay. Taxes assessed to retire voter-approved bonded debt is not subject to yield control. The law limits the overall total tax increase for the operational budgets of most local governments. If the property tax base increase, then the average rate should decrease.
Once DFA determines the rates, they are sent to the County Commission for approval. Upon approval, the rates are applied to the tax roll, and taxes are calculated for tax bills.
*Bonds that are passed in elections may also increase the tax rates.
Example of Calculation Applicable Tax
Taxable value on real and personal property is 1/3 or one-third of the total appraised value, minus any allowable exemptions, such as head-of-household or veteran’s exemption. The net taxable value is then multiplied by the tax rate to determine the actual taxes property owners are billed. Property in New Mexico is classified as residential or non-residential and is taxed at different rates.
| Full Value Of Property | $ 100,000 | |
| Calculate Taxable Value | Total Assessed Value / 3 $ 100,000 / 3 | $ 33,333 |
| Subtract Exemptions | Head of Family = $ 2,000 Veterans Exemption = $ 4,000 $2,000 + $4,0000 = $6,000 | - $ 6,0000 |
| Net Taxable Value | $ 27,333 | |
| Calculate Total Taxes Owed | Net Taxable Value * Mil Rate $ 27,333 * 0.030060 | $ 821.63 |
*Tax rate is a sample. The actual rates will vary depending on taxing district the property is located in.