New Mexico exempts Social Security from state income tax when your adjusted gross income does not exceed the threshold for your filing status. The base threshold is $100,000 for single filers, $150,000 for married couples filing jointly, heads of household, and surviving spouses, and $75,000 for married individuals filing separately; above it, the benefit is taxable again. Those base amounts are adjusted for inflation from the 2025 taxable year on, so the operative figure for your year can sit higher. The New Mexico retirement income tax still applies to pensions, IRA withdrawals, and 401(k) distributions.tax.newmexico.gov. (n.d.). Taxation and Revenue New Mexico. Retrieved Aug 12, 2026, from https://www.tax.newmexico.gov/social-security-income-tax-exemption/
This guide explains the income threshold for each filing status, what else New Mexico taxes, and what the threshold means for care withdrawals.
New Mexico Retirement Income Tax at a Glance
Here is how New Mexico handles each common source of retirement money.
| Income source | How New Mexico treats it |
|---|---|
| Social Security | Exempt if your income does not exceed the threshold for your filing status (see below). Taxable above it. |
| Pensions (private and public) | Taxed. |
| IRA and 401(k) withdrawals | Taxed. |
| Senior exclusion | A separate exemption of up to $8,000 each is available to taxpayers 65 and older, depending on income level. |
The Social Security Threshold for Your Filing Status
The exemption is income-tested, and the line depends on how you file. Section 7-2-5.14 NMSA 1978 sets the base amount at $100,000 for single filers; $150,000 for married couples filing jointly, for heads of household, and for surviving spouses; and $75,000 for married individuals filing separately.tax.newmexico.gov. (n.d.). Taxation and Revenue New Mexico. Retrieved Aug 12, 2026, from https://www.tax.newmexico.gov/social-security-income-tax-exemption/ Each figure is measured against your adjusted gross income.
| Filing status | Social Security is exempt if your AGI is |
|---|---|
| Single | Not more than $100,000 |
| Married filing jointly | Not more than $150,000 |
| Head of household | Not more than $150,000 |
| Surviving spouse | Not more than $150,000 |
| Married filing separately | Not more than $75,000 |
Note the direction: the exemption reaches taxpayers whose income does not exceed the figure for their status, so a filer whose income lands exactly on the threshold is still exempt; one a dollar above it is not.tax.newmexico.gov. (n.d.). Taxation and Revenue New Mexico. Retrieved Aug 12, 2026, from https://www.tax.newmexico.gov/social-security-income-tax-exemption/ A head of household or surviving spouse at $130,000 is comfortably inside the exemption, and so is one at exactly $150,000.
These are base amounts. House Bill 249 (2024) amended the statute so that for the 2025 taxable year and each year after, the figures are adjusted for inflation and rounded down to the nearest $100, which means the operative threshold in a current tax year can sit above the base figure.tax.newmexico.gov. (n.d.). Taxation and Revenue New Mexico. Retrieved Aug 12, 2026, from https://www.tax.newmexico.gov/social-security-income-tax-exemption/ Check the figure for your filing year with the department before you rely on it.
Pensions, IRA withdrawals, and 401(k) distributions are taxable whatever your filing status.tax.newmexico.gov. (n.d.). Taxation and Revenue New Mexico. Retrieved Aug 12, 2026, from https://www.tax.newmexico.gov/social-security-income-tax-exemption/ A separate, smaller break exists for taxpayers 65 and older, which we explain next.
New Mexico Retirement Income Tax: How It Works
New Mexico imposes a tax on the net income of every resident.tax.newmexico.gov. (n.d.). Taxation and Revenue New Mexico. Retrieved Aug 12, 2026, from https://www.tax.newmexico.gov/social-security-income-tax-exemption/ Retirement income that is taxable, your pensions and account withdrawals, is taxed under that schedule alongside your other income.
The headline for retirees is the Social Security exemption, and it is income-tested against your filing status. The benefit is exempt if your adjusted gross income does not exceed $100,000 (single), $150,000 (married filing jointly, head of household, or surviving spouse), or $75,000 (married filing separately).tax.newmexico.gov. (n.d.). Taxation and Revenue New Mexico. Retrieved Aug 12, 2026, from https://www.tax.newmexico.gov/social-security-income-tax-exemption/ Above your figure, Social Security is taxable, so higher-income retirees lose the break.
The Social Security Thresholds Are a Cliff to Watch
Pay attention to where your income sits relative to the threshold for your status. The exemption applies in full while your income does not exceed the line; pass it and your Social Security becomes taxable.tax.newmexico.gov. (n.d.). Taxation and Revenue New Mexico. Retrieved Aug 12, 2026, from https://www.tax.newmexico.gov/social-security-income-tax-exemption/ For a single retiree near $100,000, or a couple, head of household, or surviving spouse near $150,000, a large IRA withdrawal that lifts income above the threshold can flip the benefit from exempt to taxed.
That makes withdrawal timing matter. A retiree who would otherwise stay within the $100,000 single threshold could, by taking a big one-time 401(k) withdrawal, push past the line and expose their Social Security to tax that year.tax.newmexico.gov. (n.d.). Taxation and Revenue New Mexico. Retrieved Aug 12, 2026, from https://www.tax.newmexico.gov/social-security-income-tax-exemption/ Spreading withdrawals across years can keep income within the threshold and the benefit exempt.
A Separate $8,000 Exemption for Taxpayers 65 and Older
The Taxation and Revenue Department's retiree guidance names a separate exemption from taxable income of up to $8,000 each for taxpayers 65 or older, depending on income level.tax.newmexico.gov. (n.d.). Taxation and Revenue New Mexico. Retrieved Aug 12, 2026, from https://www.tax.newmexico.gov/social-security-income-tax-exemption/ This is distinct from the Social Security exemption and can reduce taxable income for seniors who qualify.
It is a modest break, and what you get depends on your income level, so the department is the place to confirm the figure for your situation.tax.newmexico.gov. (n.d.). Taxation and Revenue New Mexico. Retrieved Aug 12, 2026, from https://www.tax.newmexico.gov/social-security-income-tax-exemption/ The same guidance names separate deductions for railroad retirement, armed forces retirement pay, and Social Security.
What This Means for Paying for Care
If you are drawing on retirement savings to pay for senior care, New Mexico taxes those withdrawals, and a large one can also push you over the Social Security thresholds.
A 401(k) or IRA withdrawal to cover assisted living is taxable New Mexico income.tax.newmexico.gov. (n.d.). Taxation and Revenue New Mexico. Retrieved Aug 12, 2026, from https://www.tax.newmexico.gov/social-security-income-tax-exemption/ If the withdrawal lifts your total income above $100,000 single, above $150,000 for a joint filer, head of household, or surviving spouse, or above $75,000 filing separately, it can also make your Social Security taxable for that year, a double cost worth planning around.
The indirect cost is often the bigger one. Losing the Social Security exemption exposes the benefit for the whole year, not just the withdrawn dollars, so a single large distribution can cost far more than the tax on the distribution itself.tax.newmexico.gov. (n.d.). Taxation and Revenue New Mexico. Retrieved Aug 12, 2026, from https://www.tax.newmexico.gov/social-security-income-tax-exemption/ Keeping income within the threshold, where possible, protects the benefit from tax.
The federal side is separate. A large withdrawal still raises your federal taxable income, which can lift your federal tax and your Medicare premiums two years out. So the timing and size of care withdrawals matter on both the state and federal fronts.
For the federal mechanics, including the early-withdrawal penalty and required distributions, see our guide to using retirement accounts for care. To sequence your income sources sensibly, see building a senior care funding plan. If you are just starting to map the money, begin with how to pay for senior care.
A tax professional can run your full picture, state and federal, before you withdraw large sums.
Other Situations to Check
New Mexico taxes retirement income other than exempt Social Security, including pensions, IRA withdrawals, and 401(k) distributions.tax.newmexico.gov. (n.d.). Taxation and Revenue New Mexico. Retrieved Aug 12, 2026, from https://www.tax.newmexico.gov/social-security-income-tax-exemption/ A few less-common situations turn on rules this guide cannot settle for everyone. In each case, confirm your specifics with the state before you file:
- Military retirement pay. The department's retiree guidance names a deduction for armed forces retirement pay, alongside one for railroad retirement.tax.newmexico.gov. (n.d.). Taxation and Revenue New Mexico. Retrieved Aug 12, 2026, from https://www.tax.newmexico.gov/social-security-income-tax-exemption/ Ask the department what it works out to for your tax year.
- High out-of-pocket medical costs. Seniors 65 and older with large medical bills should ask the department whether an additional deduction or exemption applies to their situation.
- Moving into or out of New Mexico mid-year. If you become a New Mexico resident, or leave the state, partway through the year, how much of your retirement income New Mexico can tax turns on part-year and non-resident rules; confirm your case with the department.
For any of these, the New Mexico Taxation and Revenue Department can tell you what applies before you file.
What This Adds Up To for New Mexico Retirees
Social Security escapes New Mexico income tax as long as your adjusted gross income does not exceed the threshold for your filing status: $100,000 single, $150,000 for joint filers, heads of household, and surviving spouses, and $75,000 filing separately.tax.newmexico.gov. (n.d.). Taxation and Revenue New Mexico. Retrieved Aug 12, 2026, from https://www.tax.newmexico.gov/social-security-income-tax-exemption/ At or under that line, the benefit is untaxed.
The catch is the line itself. Above your threshold, Social Security becomes taxable again, so higher-income retirees still pay on their benefit.tax.newmexico.gov. (n.d.). Taxation and Revenue New Mexico. Retrieved Aug 12, 2026, from https://www.tax.newmexico.gov/social-security-income-tax-exemption/ And pensions and account withdrawals stay taxable, with only the separate exemption of up to $8,000 each for taxpayers 65 or older, depending on income level.
One more thing to track: the thresholds move. They are indexed for inflation from the 2025 taxable year on, rounded down to the nearest $100, so the figure that governs your filing year may be higher than the base amount printed above.tax.newmexico.gov. (n.d.). Taxation and Revenue New Mexico. Retrieved Aug 12, 2026, from https://www.tax.newmexico.gov/social-security-income-tax-exemption/
The takeaway: New Mexico exempts Social Security for retirees within their filing-status threshold and taxes other retirement income. The thing to watch is that threshold; a large care withdrawal that carries you past it can cost you the exemption, so plan withdrawals with the line in mind.
Frequently Asked Questions
Does New Mexico tax Social Security benefits?
Only from a certain income level up. New Mexico exempts Social Security for taxpayers whose adjusted gross income does not exceed $100,000 (single), $150,000 (married filing jointly, head of household, or surviving spouse), or $75,000 (married filing separately), and taxes it above those thresholds.tax.newmexico.gov. (n.d.). Taxation and Revenue New Mexico. Retrieved Aug 12, 2026, from https://www.tax.newmexico.gov/social-security-income-tax-exemption/ Those base amounts are indexed for inflation from the 2025 taxable year on.
What is the New Mexico Social Security exemption for a head of household or a surviving spouse?
Both get the same $150,000 base limit as married couples filing jointly: Social Security is exempt if your adjusted gross income does not exceed $150,000, and taxable above it.tax.newmexico.gov. (n.d.). Taxation and Revenue New Mexico. Retrieved Aug 12, 2026, from https://www.tax.newmexico.gov/social-security-income-tax-exemption/ A widow filing as a surviving spouse at $130,000 of income owes no New Mexico tax on her benefit.
Does New Mexico tax pensions and 401(k) withdrawals?
Yes. New Mexico taxes pensions, IRA withdrawals, and 401(k) distributions.tax.newmexico.gov. (n.d.). Taxation and Revenue New Mexico. Retrieved Aug 12, 2026, from https://www.tax.newmexico.gov/social-security-income-tax-exemption/ A separate exemption of up to $8,000 each is available to taxpayers 65 or older, depending on income level.
Do the New Mexico Social Security thresholds change each year?
Yes. House Bill 249 (2024) amended Section 7-2-5.14 NMSA 1978 so that from the 2025 taxable year on, the $100,000, $150,000, and $75,000 base amounts are adjusted for inflation and rounded down to the nearest $100.tax.newmexico.gov. (n.d.). Taxation and Revenue New Mexico. Retrieved Aug 12, 2026, from https://www.tax.newmexico.gov/social-security-income-tax-exemption/ The operative threshold for your filing year can therefore sit above the base figure; confirm it with the department.
What is the New Mexico senior exemption?
Beyond the income-tested Social Security exemption, the Taxation and Revenue Department names an exemption from taxable income of up to $8,000 each for taxpayers 65 or older, depending on income level.tax.newmexico.gov. (n.d.). Taxation and Revenue New Mexico. Retrieved Aug 12, 2026, from https://www.tax.newmexico.gov/social-security-income-tax-exemption/ It reduces taxable income for seniors who qualify.
Learn More
Find personalized help planning how to pay for senior care at brevy.com.
The information on Brevy.com is for educational purposes only and is not a substitute for professional legal, financial, or medical advice. Rules vary by state and program and change frequently. Always verify with the relevant agency or a qualified professional. Brevy is not a law firm, financial advisor, or healthcare provider.