Does New Mexico tax pensions and retirement income?
Taxed, with narrow exceptions
Yes. New Mexico taxes pensions. People 65 or older may get an exemption of up to $8,000 each, depending on income and filing status.
In the state's own words
Copied word for word from the official document linked below each quote:
“Exemption for persons age 65 or older, or blind You may be eligible for an exemption of up to $8,000 based on your filing status and your federal adjusted gross income from PIT-1, line 9, if: • You are 65 or older, or • You are not yet 65, but considered blind for federal income tax purposes.”
And Social Security?
For most people, no. New Mexico exempts Social Security for taxpayers under its income limits. Above them, the benefits are taxed. The New Mexico Social Security page quotes the rule.
Federal tax still applies
Whatever New Mexico does, pensions, annuities and traditional IRA or 401(k) withdrawals are generally taxable on your federal return. See the federal tax brackets and, if you are 73 or older, the required minimum distribution calculator.
State rules change, and the details (age limits, income limits, which plans qualify) matter. Check with the New Mexico Taxation and Revenue Department before you file or move.
Other states in the same group
Check our work
The answer above comes from this document. Follow the link and compare.
- Instructions for 2025 PIT-ADJNew Mexico Taxation and Revenue Department. Read on November 12, 2026.