The study, released on Monday, shows that Farmington ranking moved from eighth to sixth most tax-friendly city since the last study was conducted in 2009.
The two major taxes in New Mexico that vary from region to region are the sales and property tax, said Paul Gessing, Rio Grande Foundation President.
"It doesn't encompass everything, but it does paint a local picture," he said.
Gessing said he hopes that New Mexico's residents will use the foundation's study to evaluate their city's tax situation and approach their elected officials if they would like to see policies changed.
"It's not apples to apples across cities, but it can give people pointers," he said.
The Rio Grande Foundation study examined sales and property tax rates from New Mexico's 10 most populated cities. It compared how much each resident, on average, pays in taxes based on their per capita income. The final figure is called the tax burden.
Farmington's tax burden fell the most, according to the foundation's 2012 report. The city went from third to fifth most heavily taxed burdened city in the state.
In 2009, the city's tax burden was 9.31 percent. The study found in 2012, the percentage had dropped to 7.88.
The city saw a reduction in property tax rates of nearly 2 percent despite a statewide increase in rates, the report said.
According to the 2012 report, Albuquerque remains the most heavily tax-burdened city in the state with 10.23 percent. Rio Rancho, Las Cruces and Santa Fe also rank higher in the tax burden than Farmington, while Alamogordo, Roswell, Clovis, Hobbs and Carlsbad were ranked lower.
The findings are welcomed news to Farmington Chamber of Commerce President Dorothy Nobis.
"Our elected officials do the very best they can to keep taxes low," Nobis said. "In spite of tough economic times, the fact that we're right in the middle is great. It's a positive, not a negative."
Farmington Mayor Tommy Roberts said he had not seen the returned and refrained from offer a comment.
Farmington's current sales tax rate is 7.125 percent, according the city's latest figures. The sales tax in Farmington is the second lowest in the state. Albuquerque's sale tax is 7 percent but Albuquerque's property tax rate is nearly double that of Farmington's.
"We do continue to see growth," Nobis said. "We have these big box stores coming in all the time, and we also have mom and pop businesses opening up and staying open."
In addition, the city's services have not slipped, she said. The city continues to maintain its parks, the Animas River Trail and other quality of life amenities.
"I say we have the best community in the state," she said. "I firmly believe our tax dollars go to benefit the community."
Although City Manager Rob Mayes was unable to comment about the city's tax policies, he stated that the city of Farmington delivers a number of services for a comparatively low tax rate.
"At the city of Farmington, we strive to offer our services to the community at a great value," Mayes said. "What is clear is that we have some of the highest levels of services and low tax rates. The city has been very conservative over the years."
The city was given the authority to raise the gross receipts tax rate by 1.125 percent. City Council and Roberts decided not to hike the tax.
The Rio Grande Foundation is an economic policy advocacy group based in Albuquerque. It is affiliated with the nationwide State Policy Network, a network of free-market economics oriented research groups based in Arlington, Va.
The foundation advocates limited taxation, reduced government spending, and a strict reading of the U.S. Constitution among its issues.
For more information on the Rio Grande Foundation and to view the 2012 Tax Burden Report, visit www.riograndefoundation.org.