State retirement taxes · 2026
Does New Mexico tax retirement income?
Short answer: Partly. Social Security is fully exempt if AGI is $100,000 or less ($150,000 joint); above that, all of the federally taxable amount is taxed. No pension or IRA exclusion; the 65+ exemption of up to $8,000 applies only at low incomes.
AGI is the adjusted gross income on your federal tax return.
What’s taxed in New Mexico
2026 rules. AGI means the adjusted gross income on your federal return.
- Social SecurityPartly taxed
- Social Security is fully exempt if AGI is $100,000 or less ($150,000 joint); above that, all of the federally taxable amount is taxed.
- PensionsTaxed
- Public and private pensions are fully taxable; New Mexico has no pension exclusion.
- IRA & 401(k) withdrawalsTaxed
- IRA and 401(k) withdrawals are fully taxable.
- Military retirement payPartly taxed
- Up to $30,000 per retiree of armed forces retirement pay is exempt (each spouse can claim $30,000). A 2026 bill to remove the cap died.
- Income tax rate5.9% top
- Six brackets from 1.5% to 5.9%; the top rate applies above $210,000 single or $315,000 joint.
Does New Mexico tax Social Security?
Social Security is fully exempt if AGI is $100,000 or less ($150,000 joint); above that, all of the federally taxable amount is taxed.
The exemption applies if federal AGI does not exceed $100,000 single, $75,000 married filing separately, or $150,000 joint, head of household or surviving spouse. It is all-or-nothing: one dollar over and the full federally taxable amount is taxed. There is no age requirement, and the thresholds are not indexed.
Your federal return is a separate question — see how much of your benefit the IRS taxes with the taxable Social Security calculator.
Are pensions taxed in New Mexico?
Public and private pensions are fully taxable; New Mexico has no pension exclusion.
Relief comes only through the 65+ exemption (up to $8,000 per person, low incomes only) and the armed forces retirement exemption.
Public vs. private pensions: Treated the same: taxable.
Are IRA and 401(k) withdrawals taxed in New Mexico?
IRA and 401(k) withdrawals are fully taxable.
Only the income-limited 65+ exemption applies.
Required minimum distributions (RMDs) are IRA and 401(k) withdrawals, so the same rules apply. Estimate your RMD.
Is military retirement pay taxed in New Mexico?
Up to $30,000 per retiree of armed forces retirement pay is exempt (each spouse can claim $30,000). A 2026 bill to remove the cap died.
What is New Mexico’s income tax rate?
6 brackets, topping out at 5.9%.
Six brackets from 1.5% to 5.9%; the top rate applies above $210,000 single or $315,000 joint. Not indexed, so 2026 matches 2025.
2026 brackets. Each rate applies to taxable income above the amount shown.
| Single | Married, joint | Rate |
|---|---|---|
| $0 | $0 | 1.5% |
| $5,500 | $8,000 | 3.2% |
| $16,500 | $25,000 | 4.3% |
| $33,500 | $50,000 | 4.7% |
| $66,500 | $100,000 | 4.9% |
| $210,000 | $315,000 | 5.9% |
Standard deduction and exemptions
New Mexico uses your federal standard or itemized deduction, plus a $4,000 deduction for each qualifying dependent after the first. A low- and middle-income exemption of up to $2,500 per exemption applies when AGI is $36,667 or less single ($55,000 joint, $27,500 separate).
What tax breaks do seniors get in New Mexico?
Exemption for 65+ or blind: up to $8,000 per person, in full at AGI up to $18,000 single or $30,000 joint, shrinking to zero above $28,500 single or $51,000 joint. People 65+ with unreimbursed medical expenses of $28,000 or more get a $3,000 medical care exemption and a refundable $2,800 medical care credit. A property tax rebate of up to $250 at 65+ with modified gross income of $16,000 or less. An exemption for people 100 and older.
What changed for 2026?
HB 252 restructured the brackets from 2025. SB 151 (signed March 11, 2026) adds business and professional credits from 2027 but nothing on Social Security, pensions or the 65+ exemption. SB 116, which would have removed the military cap, died. The Social Security thresholds are not indexed.
Rates from HB 252 (2024) apply from 2025 and are not indexed; exemptions from the 2025 PIT-ADJ instructions. No 2026 change enacted.
What we couldn’t confirm
- New Mexico hasn’t said explicitly whether the federal $6,000 senior deduction counts; its form points to a federal line that excludes it, so we don’t count it.
- We did not re-check HB 221 (2026), a second bill on the military cap.
How New Mexico compares with its neighbors
Thinking of moving across the line? Here’s how each bordering state treats retirement income in 2026.
- New MexicoThis pageLess friendlySocial Security Partly taxedTop rate: 5.9% top
- ArizonaFriendlySocial Security Not taxedTop rate: 2.5% flat
- ColoradoVery friendlySocial Security Partly taxedTop rate: 4.4% flat
- OklahomaFriendlySocial Security Not taxedTop rate: 4.5% top
- TexasTax-free retirement incomeSocial Security Not taxedTop rate: None
State tax is half the picture — check the federal side
New Mexico retirement tax questions
Is New Mexico tax-friendly for retirees?
We rate New Mexico “Less friendly” for 2026. Social Security is fully exempt if AGI is $100,000 or less ($150,000 joint); above that, all of the federally taxable amount is taxed. No pension or IRA exclusion; the 65+ exemption of up to $8,000 applies only at low incomes. The top income tax rate is 5.9%.
Are required minimum distributions (RMDs) taxed in New Mexico?
RMDs are withdrawals from IRAs and 401(k)-type plans, so they follow New Mexico’s rules for those accounts. IRA and 401(k) withdrawals are fully taxable.
Is military retirement pay taxed in New Mexico?
Partly. Up to $30,000 per retiree of armed forces retirement pay is exempt (each spouse can claim $30,000). A 2026 bill to remove the cap died.
What happens if my income is just over New Mexico’s Social Security limit?
You lose the whole exemption. New Mexico’s Social Security exemption is all-or-nothing: at federal AGI above $100,000 single ($150,000 joint or head of household, $75,000 separate), the full federally taxable amount of your benefits is taxed. Keeping AGI under the line — for example by timing IRA withdrawals — can matter a lot.
Sources for New Mexico
Primary sources only. We re-check them whenever an agency publishes new figures.
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