Mostly taxed
How New Mexico taxes retirement income
Since 2022 New Mexico has exempted Social Security for single filers with income under $100,000, married couples filing jointly and heads of household under $150,000, and married people filing separately under $75,000. Above those lines, the federally taxable part of Social Security is taxed.
Pensions are taxed, including New Mexico Educational Retirement Board and PERA pensions, as are 401(k), 403(b), 457(b) and IRA withdrawals. Taxpayers 65 or older with lower incomes can claim an exemption of up to $8,000 each, which shrinks as income rises, and New Mexico residents 100 or older pay no income tax at all.
Armed forces retirement pay has its own exemption, and people 65 and older with very large unreimbursed medical costs can claim an extra deduction.
Questions
Does New Mexico tax Social Security?
Not for most retirees. It is exempt for single filers under $100,000 of income and joint filers under $150,000.
Does New Mexico tax ERB and PERA pensions?
Yes, though lower-income retirees 65 and older can claim an exemption of up to $8,000 each.
What is the 65 or older exemption?
Up to $8,000 per person, depending on income and filing status. It phases out at moderate incomes.