Turo Host Taxes in New Mexico - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for Turo Hosts in New Mexico

The Land of Enchantment offers a unique opportunity for entrepreneurial drivers through platforms like Turo, but successfully navigating the tax implications is crucial for maximizing earnings. As a Turo host in New Mexico, understanding both federal and state tax obligations is essential.

The IRS requires all Turo hosts to report income earned on Schedule C (Profit or Loss From Business) as self-employment income. This means income received through Turo is subject to both income tax and self-employment tax, which covers Social Security and Medicare taxes. Platforms like Turo do not withhold these taxes, making proactive tax planning and quarterly estimated tax payments vital to avoid penalties.

How New Mexico Handles Gig Worker Taxes

As a resident of New Mexico, you are required to file a state income tax return, even if your only income is from Turo. New Mexico utilizes a graduated income tax system, meaning the tax rate increases as your income rises. For the 2025 tax year, New Mexico’s primary form for reporting self-employment income is Form W-4 and Schedule IN. This form is used to calculate your New Mexico taxable income and determine your state tax liability. New Mexico also has a non-refundable tax credit for small businesses, which may be applicable depending on your income and expenses. It’s important to note that New Mexico’s Department of Taxation and Revenue actively monitors gig economy income, so accurate reporting is paramount. The state also requires you to pay estimated taxes quarterly if you expect to owe more than $1,000 in state income tax. Failure to do so can result in underpayment penalties. New Mexico’s tax laws are subject to change, so staying informed through official sources is highly recommended. You can find comprehensive information and resources on the New Mexico Taxation and Revenue Department website: https://www.tax.newmexico.gov/

Top Tax Deductions for New Mexico Drivers

• Standard Mileage: The #1 deduction for most Turo hosts. The 2025 rate is 70 cents per mile. Given New Mexico’s relatively expansive geography and the distances often traveled for pickups and drop-offs, the standard mileage rate is often a very beneficial option.
• Tolls & Parking: While New Mexico doesn’t have extensive toll road systems, any tolls incurred during Turo trips are deductible. Parking fees directly related to vehicle rentals are also deductible.
• Phone & Data Plan: If you use your phone for Turo-related activities (communication with renters, managing bookings, etc.), you can deduct the percentage of your phone bill attributable to business use.
• Vehicle-Related Costs: Expenses like car wash supplies, air fresheners, phone mounts for renters, and even small amenities offered to renters are deductible as ordinary and necessary business expenses.

Key Warning: You cannot deduct both the standard mileage rate and actual car expenses like gas or repairs in the same year. Choose the method that yields the largest deduction.

Understanding the 15.3% Self-Employment Tax

Self-employment tax is comprised of Social Security and Medicare taxes. When working for an employer, these taxes are split between the employer and employee. As a self-employed Turo host, you are responsible for the full 15.3% amount on net earnings exceeding $400. Remember to factor this into your overall tax planning.