Live in Utah, Work in New Mexico: Which State Taxes Your Paycheck?
Answer
Two returns, one credit. New Mexico has the first claim on wages earned inside the state and withholds accordingly. Utah then taxes you as a resident on everything and gives credit for what New Mexico already took, capped at what Utah would have charged on that same income.
Last verified
Without an agreement between Utah and New Mexico, the overlap is handled after the fact rather than prevented. That is why the filing order matters: the New Mexico figure is an input to the Utah return, so completing Utah first means doing it twice.
A Utah resident taxed by another state on the same income claims the credit for taxes paid to other states on Schedule TC-40S. The credit is capped at the Utah tax on that income, so it removes the double tax but never refunds the excess when the other state charges more.
What you file
- 1Nonresident return · New MexicoForm PIT-1 with Schedule PIT-B
File the New Mexico nonresident return FIRST — you need the New Mexico tax figure before you can complete Utah.
- 2Resident return · UtahSchedule TC-40S
File a Utah resident return reporting all income, then claim the credit for tax paid to New Mexico. The credit is capped at what Utah would have charged on that same income, so if New Mexico taxes it at a higher rate the difference is not refunded.
The two states, side by side
| Utah | New Mexico | |
|---|---|---|
| Taxes wages | Yes — flat | Yes — graduated |
| Reciprocity partners | None | None |
| Convenience rule | No | No |
| Nonresident return | Form TC-40 with Schedule TC-40B | Form PIT-1 with Schedule PIT-B |
| Credit for other-state tax | Schedule TC-40S | Form PIT-1 (credit for taxes paid to another state) |
| Nonresident safe harbour | None published | None published |
| Local income tax | No | No |
| Revenue department | Utah State Tax Commission | New Mexico Taxation and Revenue Department |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in New Mexico and working in Utah gives:Both states — credit offsets the double tax.
Same two states, different situation
The withholding answer turns on how you are paid and where the work happens, not only on which two states are involved.
- Remote worker: Utah → New MexicoHome state only
- 1099 contractor: Utah → New MexicoHome state, plus the client state if you work there
- Moved mid-year: Utah → New MexicoTwo part-year returns
Other Utah pairs
Questions people actually ask
I live in Utah and work in New Mexico. Which state takes the tax out of my paycheck?
Two returns, one credit. New Mexico has the first claim on wages earned inside the state and withholds accordingly. Utah then taxes you as a resident on everything and gives credit for what New Mexico already took, capped at what Utah would have charged on that same income.
Which state should my employer be withholding for?
New Mexico. The wages are sourced to New Mexico, so New Mexico withholding is correct and there is no Utah withholding to set up.
Will I end up paying tax twice on the same income?
Not twice over, but you will pay the higher of the two rates. Utah gives residents a credit for tax paid to New Mexico on the same income, claimed on Schedule TC-40S. The credit is capped at the Utah tax on that income, so if New Mexico taxes it more heavily the excess is not refunded by either state.
How current is this?
The Utah and New Mexico rules on this page were last checked against Utah State Tax Commission and New Mexico Taxation and Revenue Department on 2026-08-07. We re-check the full grid every December after state legislative sessions close, and re-check the convenience-of-the-employer states quarterly because that is where the rules move fastest.
Sources
Every fact above comes from the revenue department that publishes the rule. We do not cite secondary summaries, and we do not restate a figure we could not find at source.
- Utah State Tax Commission — individual income taxaccessed 2026-08-07
- New Mexico Taxation and Revenue Department — individual income taxaccessed 2026-08-07