State guides · NM

How New Mexico taxes retirement income

Some 2026 figures pending confirmation  Tax year 2026 · research last updated October 2, 2026

At a glance

Tax rates

Brackets apply to New Mexico taxable income. Other filing statuses are in the rules reference.

Social Security

New Mexico taxes some Social Security, depending on age or income.

Exemption for social security income (PIT-ADJ line 25): if federal AGI (PIT-1 line 9, which INCLUDES the taxable Social Security) does not exceed $100,000 single, $150,000 MFJ / HOH / surviving spouse, or $75,000 MFS, subtract 100% of the Social Security included in federal AGI. If AGI exceeds the threshold by $1, NONE is exempt (hard cliff, no phase-out); Social Security is then taxed exactly as federal (taxable portion). Thresholds are statutory, not indexed. SB 156 (2026) to remove the cap died in committee.

Pensions, IRAs and 401(k)s

New Mexico has no general exclusion for pension, IRA or 401(k) income in 2026. It's taxed at the rates above, after any deductions and credits.

Roth conversions

A Roth conversion counts as taxable income for New Mexico.

Capital gains

Net capital gains deduction (PIT-ADJ line 16), tax years 2025+: deduct the GREATER of (a) 100% of net capital gain up to $2,500, or (b) 40% of up to $1,000,000 of net capital gain from the sale of a BUSINESS allocated/apportioned to New Mexico. 'Net capital gain' is IRC 1222(11) (net LTCG over net STCL); short-term gains excluded. MFS spouses each get half the joint amount. For an investment-portfolio retiree this is effectively a $2,500 deduction; remaining gains are ordinary. (Before 2025 it was the greater of $1,000 or 40% of all net capital gains.)

Credits and relief for older residents

• Medical care expense exemption for persons 65 or older (PIT-ADJ line 18). $3,000 exemption if taxpayer or spouse is 65+ and paid $28,000 or more of unreimbursed, uncompensated medical care expenses in the year.
• Refundable medical care credit for persons 65 or older (Schedule PIT-RC). Refundable credit for 65+ with $28,000+ of unreimbursed medical expenses; amount not captured here.
• Property tax rebate for persons 65 or older and Low Income Comprehensive Tax Rebate (Schedule PIT-RC). Low-income rebates based on modified gross income (which includes exempt Social Security); relevant only to low-income retirees. Thresholds not captured here.

More detail from our research notes

NM taxable income = federal AGI + additions - federal standard or itemized deduction (PIT-1 line 12 = Form 1040 line 12e, so it includes the federal extra standard deduction for 65+/blind but NOT the Form 1040 line 13b Schedule 1-A items such as the OBBBA $6,000 senior deduction) - PIT-1 line 13 dependent deduction - line 14 low- and middle-income exemption - PIT-ADJ deductions/exemptions. Age 65 or older / blind exemption (PIT-ADJ line 13, statutory Table 1, per qualifying person, 65+ or blind on the last day of the tax year, one exemption per person even if both): by federal AGI - MFJ/HOH/surviving spouse: <= $30,000 -> $8,000, then drops $1,000 per $3,000 of AGI, $51,001+ -> $0; single: <= $18,000 -> $8,000, $1,000 less per $1,500, $28,501+ -> $0; MFS: <= $15,000 -> $8,000, $1,000 less per $1,500, $25,501+ -> $0 (exact rows: MFJ 30,001-33,000 $7,000; 33,001-36,000 $6,000; 36,001-39,000 $5,000; 39,001-42,000 $4,000; 42,001-45,000 $3,000; 45,001-48,000 $2,000; 48,001-51,000 $1,000). Low- and middle-income exemption (PIT-1 line 14): if federal AGI <= $36,667 single / $55,000 MFJ-HOH-SS / $27,500 MFS: per exemption (taxpayer, spouse, dependents) $2,500 - rate x (AGI - base), base $20,000 single / $30,000 MFJ-HOH / $15,000 MFS, rate 0.15 single / 0.10 MFJ-HOH / 0.20 MFS. No general pension/IRA exclusion: pensions, IRA and 401(k) distributions and Roth conversions are taxed as in federal AGI. Armed forces retirement pay exemption up to $30,000 per retiree (military only, not modeled). HOH uses the MFJ brackets. Brackets are statutory (HB 252, 2024, effective 2025) and NOT indexed; the 2026 session (SB 151, Laws 2026 ch. 69, effective TY2027) changed corporate tax and business credits only, so 2026 PIT brackets, SS thresholds and 65+ table are unchanged from 2025. No local income tax.

Pending confirmation

These points were still being confirmed against New Mexico's published 2026 forms when this page was built. Most are waiting on forms the state publishes around the turn of the year.

4 items

• TRD's 2025 Tax Rate Table (over-$100,000 section) prints base amounts $2 lower than statute: MFJ/HOH $4,087 at $100,000 (statute $4,089) and $14,622 over $315,000 (statute $14,624); single $4,356 / $9,746 (statute $4,358 / $9,748); MFS $4,492 / $7,310 (statute $4,494.50 / $7,312). The brackets array reproduces the statute (NMSA 7-2-7 as amended by HB 252). Returns filed with the TRD table will show tax $2 lower for taxable income over $100,000; decide which to match.
• 2026 PIT-1 instructions/tax table not yet published (TRD posts them Dec 2026-Jan 2027 at https://www.tax.newmexico.gov/forms-publications/); 2026 values are the statutory amounts, which are not indexed (HB 252 brackets, 65+ table, Social Security limits). 2026 session checked: SB 151 (Laws 2026 ch. 69) changes no retiree item; Social Security bills HB 92/SB 156/HB 163 died.
• Assumption that PIT-1 line 12 excludes the Form 1040 line 13b senior deduction should be confirmed in the 2026 PIT-1 instructions (2025 instructions refer to Form 1040 line 12 standard or itemized deduction).
• Amounts of the refundable 65+ medical care credit and PIT-RC rebates not captured.

Sources

Every figure comes from these documents, mostly the state's own forms, instructions and statutes.

1. Statutory 2025+ rate tables (NMSA 7-2-7 as amended by HB 252, 2024) for all filing statuses; capital gains deduction changehttps://www.nmlegis.gov/Sessions/24%20Regular/bills/house/HB0252.html
2. 2025 PIT-ADJ instructions: 65+/blind exemption Table 1, net capital gains deduction ($2,500 or 40% business sale), $3,000 65+ medical exemption, Social Security exemption thresholds (Table 2) and exampleshttps://realfile.tax.newmexico.gov/2025pit-adj-ins.pdf
3. 2025 PIT-1 instructions: line 12 federal standard/itemized deduction, line 14 low- and middle-income exemption worksheet, PIT-RC rebates list; PIT-1 line 10 itemized state and local tax deduction add-back: 5e x 5a/5d (4 decimals), limited to itemized - federal standard deduction (2025 PIT-1 instructions pp. PIT-1-23/24)https://realfile.tax.newmexico.gov/2025pit-1-ins.pdf
4. 2025 Tax Rate Table (tax table rows and over-$100,000 formulas)https://realfile.tax.newmexico.gov/2025trt.pdf
5. LFC 2026 post-session review: 2026 tax legislation (SB 151) did not change PIT brackets or retiree provisionshttps://www.nmlegis.gov/Entity/LFC/Documents/Session_Publications/Post_Session_Fiscal_Reviews/2026%20Post%20Session.pdf
6. SB 156 (2026) proposal to remove Social Security AGI cap (did not pass)https://www.nmlegis.gov/Sessions/26%20Regular/bills/senate/SB0156.HTML
7. federalStandardDeduction*, federalAged*: 2026 federal standard deduction and additional amounts, Rev. Proc. 2025-32 sec. 4.15https://www.irs.gov/pub/irs-drop/rp-25-32.pdf
8. SB 151 (2026), Laws 2026 ch. 69 (signed Mar 11 2026): corporate decoupling and business credits from TY2027; no individual rate, deduction or exemption changehttps://www.nmlegis.gov/Sessions/26%20Regular/final/SB0151.pdf

Taxtirement's New Mexico calculation is also checked against a second, independent implementation on 1,000 random households. How we check our numbers.

This page summarizes New Mexico's 2026 rules as Taxtirement applies them, for education and planning. It isn't tax advice, and it doesn't cover every situation (for example part-year residents, businesses or military-only provisions). Rules change; check the state's current instructions, or a tax professional, before you act. Spotted something wrong? Tell us.