According to the New Mexico Taxation and Revenue website, Military Retirement is taxable but taxpayers may qualify for an exemption for U.S. Armed Forces retirement pay.
To qualify for this exemption, the taxpayer must be an Armed Forces retiree. If married filing joint and the spouse is a qualifying Armed Forces retiree as well, Each qualifying Armed Forces retiree is entitled to claim an exemption in the amount of $30,000 against their military retirement pay which is included in their net income.
NOTE: Armed forces retiree means a former member of the Armed Forces of the United States who has qualified by years of service or disability to separate from military service with lifetime benefits.
To apply this exemption to your New Mexico state return:
- New Mexico state return
- Deductions from Income
- Enter the amount of your retirement pay included in your net income