Does New Mexico tax Social Security benefits?

Most retirees no longer pay. Since 2022 New Mexico exempts Social Security for single filers with AGI under 100,000 dollars and joint filers under 150,000 dollars. Above those thresholds, benefits become taxable. This tool applies the exemption automatically.

Are pensions and 401(k) withdrawals taxed in New Mexico?

Yes. Pension income and 401(k)/IRA distributions are taxed as ordinary income under New Mexico's brackets. A separate retirement-income exemption of up to 8,000 dollars per person may apply for filers age 65 or older, which this tool models.

What is New Mexico's senior income exemption?

Taxpayers 65 and older can deduct up to 8,000 dollars of income, phasing out at higher incomes. This calculator applies the full exemption when age 65-plus is selected as a simplified estimate.

What tax rate will I pay in retirement?

New Mexico's income tax is graduated from 1.7 percent up to 5.9 percent. Most retirees fall in the 3.2 to 4.7 percent range depending on total taxable income after exemptions.

Is this an official tax figure?

No. This is an estimate using simplified brackets and exemption rules. Your actual liability depends on deductions, credits, and other income. Use New Mexico Form PIT-1 or a tax professional for filing.

New Mexico Retirement Income Tax Calculator

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Many retirees move to New Mexico believing it taxes retirement income heavily, but recent law changes exempt Social Security for most households. This calculator estimates your New Mexico state income tax across Social Security, pensions, and 401(k)/IRA withdrawals so you can plan realistically.

How it works

The tool builds taxable income from your sources, then applies the rules:

social security taxable = 0 if AGI under threshold, else full benefit
senior exemption        = up to 8,000 per person if age 65+
taxable income          = pension + 401k withdrawals + taxable SS
                          − senior exemption
state tax               = graduated brackets (1.7% to 5.9%)

The Social Security exemption threshold is 100,000 dollars of AGI for single filers and 150,000 dollars for married filing jointly. Below it, benefits are fully excluded; above it, they are included as ordinary income.

Example and notes

A married couple, both 65, with 40,000 dollars of Social Security, a 20,000 dollar pension, and 15,000 dollars of 401(k) withdrawals has AGI under 150,000, so their Social Security is fully exempt. After the senior exemptions their taxable income is around 19,000 dollars, taxed in the low brackets. The result is a few hundred dollars of state tax — far less than many newcomers expect. Always confirm with current New Mexico Taxation and Revenue guidance, as thresholds adjust over time.