Updated July 28, 2026. Quick answer: Most likely not, with one caveat worth checking. New Mexico broadly exempts retirement income including IRA distributions, and a conversion is ordinary income from an IRA — but the cited authority does not single conversions out.
Confidence note: high confidence on the exclusion itself, lower on whether it reaches a conversion, because the authority does not name conversions.
Why a conversion is a different question from a withdrawal
Almost every state summary answers “how does New Mexico tax retirement income?” That is a question about distributions. A Roth conversion is not a distribution in the ordinary sense — it is a voluntary election to recognise income now in exchange for tax-free growth later. Whether a state’s retirement exclusion reaches that election is a separate question, and it is the one that decides your bill.
The exemption here is written broadly enough that a conversion very likely falls inside it. We flag it rather than stating it flatly because the authority does not name conversions, and this page’s job is to be accurate about what the source actually says.
If the amount is large enough to matter, this is a one-question call to a New Mexico preparer, and the question is narrow.
What New Mexico does with the converted amount
State income tax: graduated, 1.5% to 5.9% top rate (bracket structure restructured effective TY2025 by HB 252 of 2024)
How New Mexico treats IRA and plan income: Pensions, 401(k) and IRA withdrawals taxable. Age 65+ may claim up to an $8,000 exemption against all income, phased out at moderate incomes (NMSA § 7-2-5.2); persons age 100+ with no dependents are fully exempt (NMSA § 7-2-5.7).
What to ask a preparer about New Mexico
The authority does not name conversions. Ask whether the exclusion is applied to conversion income in practice, and get it in writing if the amount is large.
Converting around a move
Converting in the year you move into New Mexico is the case that catches people. Residency at the moment of conversion is what generally determines which state gets to tax it, so a conversion executed a week before a move and one executed a week after can produce different bills.
Four separate taxes change when you move, not one: income tax on withdrawals, treatment of Social Security, estate tax, and inheritance tax. A state that looks good on conversions can be worse on the other three.
The state bill is the smaller half
Whatever New Mexico does, the conversion is federal ordinary income first. The federal bracket you land in, and whether the conversion pushes you over an IRMAA threshold two years later, will usually move more money than the state line does. The state answer tells you whether to convert here; the federal answer tells you how much to convert at once.
Paying the tax from outside the account matters more than either. Using converted dollars to pay the bill shrinks the balance that was the entire point of converting.
Sources
Authority: NMSA 1978 § 7-2-5.14 (Social Security exemption); NMSA 1978 § 7-2-5.13 (armed forces retirement pay); NMSA 1978 § 7-2-5.2 (age 65+ exemption); NM Taxation & Revenue: Social Security Income Tax Exemption page.
Compiled from state statutes, session laws and revenue-department publications and adversarially verified in July 2026. Dataset confidence for New Mexico: high.
This page states what the cited authority says. It is not tax advice, and a conversion large enough to matter is worth putting in front of a preparer who can see your whole return.