Is My Military Income Taxable to New Mexico?

For the 2026 tax year, active duty military pay is deductible from New Mexico taxable income when it is included in your federal adjusted gross income.

New Mexico Residents

If you are a New Mexico resident, you may claim a deduction for active duty military pay that is included in your federal adjusted gross income.

To enter the deduction in the program:

1. Go to State Section.
2. Select the three dots to edit the New Mexico Resident Return.
3. Select Deductions from Income.
4. Enter the amount of military wages included on your federal return.
5. Select Continue to save.

Nonresidents of New Mexico

If you are a nonresident servicemember, your active duty military pay is not taxable by New Mexico.

To enter the deduction in the program:

1. Go to State Section.
2. Select the three dots to edit the New Mexico Nonresident Return.
3. Select Deductions from Income.
4. Enter the amount of military wages included on your federal return.
5. Select Continue to save.

Military Spouses

A qualifying nonresident military spouse may be able to exclude income earned in New Mexico and allocate that income to their state of residence under military spouse residency relief rules.

When One Spouse Is a New Mexico Resident and the Other Is Not

If one spouse is a New Mexico resident and the other spouse is a nonresident, file a New Mexico return and complete Schedule PIT-B to allocate income between New Mexico and non-New Mexico sources.

To allocate income in the program:

1. Go to State Section.
2. Select the three dots to edit the New Mexico return.
3. Select Additions to Income.
4. Select NM Allocation and Apportionment of Income (PIT-B).
5. Must select Yes to "Do you want to complete NM PIT-B?" and complete Allocation of Wages.

Important Notes

• If New Mexico was your domicile when you entered military service and you have not changed your legal residence for state tax withholding purposes, you generally must file as a New Mexico resident.
• If you established domicile in another state and changed your legal residence for state withholding purposes, your military pay is generally not subject to New Mexico income tax.
• Nonresident military spouses claiming residency relief may need to complete Schedule PIT-B and provide Form RPD-41348 to their employer to claim exemption from New Mexico withholding.