Military retirement pay in New Mexico
Varies
Does New Mexico Tax Military Retirement Pay?
Short answer: Partly. New Mexico exempts up to $30,000 a year of armed forces retirement pay (the cap since tax year 2024); pay above $30,000 is taxed. HB 252 (2024) made the exemption permanent and extended it to surviving spouses of armed forces retirees. HB 221 (2026), which would have exempted 100%, stalled in committee. Other retirement income: Pensions and 401(k)/IRA withdrawals are taxable, but taxpayers 65+ (or blind) may deduct up to $8,000 per person. The full deduction applies at AGI up to $18,000 single / $30,000 joint, phasing out to zero at $28,500 / $51,000.
Military retired pay is taxable federally; VA disability compensation isn't taxed federally or by any state.
Records to keep: Keep your state return, W-2s and 1099s (1099-R, SSA-1099), and any state credit worksheets. Check your state revenue department's current-year instructions before you file.
Military retirement pay in New Mexico
Varies
Individuals / Personal Taxes
Partly. New Mexico exempts up to $30,000 a year of armed forces retirement pay (the cap since tax year 2024); pay above $30,000 is taxed. HB 252 (2024) made the exemption permanent and extended it to surviving spouses of armed forces retirees. HB 221 (2026), which would have exempted 100%, stalled in committee. Other retirement income: Pensions and 401(k)/IRA withdrawals are taxable, but taxpayers 65+ (or blind) may deduct up to $8,000 per person. The full deduction applies at AGI up to $18,000 single / $30,000 joint, phasing out to zero at $28,500 / $51,000.
Business justification
Partly. New Mexico exempts up to $30,000 a year of armed forces retirement pay (the cap since tax year 2024); pay above $30,000 is taxed. HB 252 (2024) made the exemption permanent and extended it to surviving spouses of armed forces retirees. HB 221 (2026), which would have exempted 100%, stalled in committee. Other retirement income: Pensions and 401(k)/IRA withdrawals are taxable, but taxpayers 65+ (or blind) may deduct up to $8,000 per person. The full deduction applies at AGI up to $18,000 single / $30,000 joint, phasing out to zero at $28,500 / $51,000. Military retired pay is taxable federally; VA disability compensation isn't taxed federally or by any state.
Category
- Personal Tax Deductions