The following income can be subtracted/deducted from your New Mexico return:
New Mexico Tax-Exempt Interest and Dividends
Enter the total interest or dividend income you received from the following investments:
- State and local bonds exempt from New Mexico taxable income, including State of New Mexico or its agencies, institutions, instrumentalities, or political subdivisions.
- Obligations of the Commonwealth of Puerto Rico, Guam, Virgin Islands, American Samoa, or Northern Mariana Islands.
- Federally taxable bonds issued by the State of New Mexico, and
- Mutual funds, unit investment trusts, or simple trusts invested in obligations of the State of New Mexico or its agencies.
NOTE: You may not subtract interest and dividends from an IRA. IRAs do not qualify as a simple trust.
Net Operating Loss Carryforward
If you have unused New Mexico net operating loss carry forward from a previous year, enter the carry forward amount to apply against New Mexico taxable income for the current year.
NOTE: All New Mexico net operating losses must flow from a federal net operating loss. You may not have a New Mexico net operating loss without a federal net operating loss.
Taxable Railroad Retirement Act Annuities and Benefits and taxable Railroad Unemployment Insurance Act sick pay
Deduct taxable Railroad Retirement Act annuities and benefits and taxable sick pay under the Railroad Unemployment Insurance Act, and attach Form(s) RRB-1099 and RRB-1099R if those amounts were part of your federal taxable income.
Income of an Indian Wholly Earned on the Reservation
If you or your spouse, or both, were enrolled members of a New Mexico federally recognized Indian nation, tribe, band or pueblo, your income is exempt from federal adjusted gross income if you meet the following two conditions:
- You lived on the land of the Indian nation, tribe, band or pueblo of membership when you earned the income, and
- You earned the income within the boundaries of the reservation, pueblo grant, or within the land defined as "Indian country".
NOTE: Income (including retirement or pension income) earned outside of these boundaries for the taxpayer and spouse are subject to New Mexico income tax no matter where you live.
*Exceptions apply.
Income Deduction for 100 years of Age
To qualify for this exemption both of the following must be true:
- Taxpayer or spouse must be 100 years or older at the end of the tax year.
- Taxpayer or spouse are not able to be claimed as a dependent.
Deduction for New Mexico Medical Care Savings Account
If you or your spouse are enrolled in a New Mexico Medical Care Savings Account, (NMMSA) established by an employer, and during 2024 you made or received contributions to the account or made or received distributions from the account, you may be entitled to claim a New Mexico medical care savings account exemption.
Deduction for Contributions to New Mexico Education Trust Account
Deduct contributions you made during the tax year to the New Mexico Education Trust Fund (to an account in one of the New Mexico-approved Section 529 college savings plans) for each beneficiary.
Contributions include the principal and earnings portion of amounts rolled over to a New Mexico approved Section 529 college savings plan account from a non-New Mexico-approved Section 529 college savings plan.
NOTE: A taxpayer and spouse whose filing status is "married filing separately" may each claim one-half of the deduction allowed on a joint return.
Military Active Duty Pay
Enter the pay, wages or salaries paid to you or your spouse for active duty military service in the armed forces of the United States, if it was included in the federal adjusted gross income and reported on line 9 of Form PIT-1.
*This exemption applies to residents and non-residents of New Mexico.
Exemption for Persons Age 65 Years 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 if:
- You are 65 or older, or
- You are not yet 65, but considered blind for federal income tax purposes.
NOTE: The Department allows only one deduction per person. You may not take deductions for being both 65 or older and blind.
Medical Care Expense Deduction for Persons Age 65 Years or Older
If you or your spouse are 65 years of age or older, and you paid unreimbursed and uncompensated medical care expenses of $28,000 or more during the current tax year, you may be eligible to claim an exemption of $3,000.
Medical Care Expenses Deduction
You may claim a deduction for medical care expenses paid during the tax year for you, your spouse, or a dependent. Eligible filers include out of state residents with income tax responsibility to New Mexico.
This deduction is available through December 31, 2024.
Deduction for Organ Donation-Related Expenses
Any human organ donation-related expenses, including lost wages, lodging expenses, and travel expenses for you, spouse or your dependent, you may deduct up to $10,000.
Non-Resident U.S. Public Health Service Members’ Active Duty Pay
Enter the amount of income earned in New Mexico for active duty in the USPHS only if you are a nonresident of New Mexico. If you changed residency or domicile to or from New Mexico during the tax year, enter only the pay you earned while you were a nonresident of New Mexico.
Liquor License Lessor Deduction
Enter the amount of deduction from net income for which you qualify, the amount may not exceed $50,000.
To qualify, a taxpayer must be a New Mexico liquor license lessor and who held the license on June 30, 2021. You will enter the net income in an amount that equals the gross receipts from sales of alcoholic beverages.
New Mexico National Guard Member Life Insurance
An individual who receives a reimbursement from the National Guard Service Member’s Life Insurance Reimbursement Fund may claim a personal income tax exemption in the amount of the reimbursement.
The New Mexico Office of Military Affairs issues the reimbursement and sends each recipient a Form 1099-MISC.
Deduction for certain expenses related to a New Mexico licensed cannabis business
Enter the amount equal to any expenditure that is eligible to be claimed as a federal income tax deduction but is disallowed by Section 280E of the Internal Revenue Code.
Program Entry
- State Section
- Deductions from Income
See instructions for PIT-ADJ