Updated October 4, 2026. Quick answer: Partly. The 2025 PIT-ADJ instructions have a Line 24 “Exemption for armed forces retirement pay” that is $30,000 per qualifying retiree or surviving spouse.
More state retirement-income schedules, line by line: New Mexico PIT-ADJ retirement lines.
How New Mexico treats military retired pay
| Item | What the documents say |
|---|---|
| Treatment | Exemption of $30,000 of armed forces retirement pay includable in net income (PIT-ADJ Line 24) |
| Who qualifies | A retiree who has qualified by years of service or disability, or a surviving spouse receiving the retirement benefit |
| Joint returns | If married filing jointly and both spouses qualify, each may claim $30,000 |
| Age or rates | The instructions print no age threshold and no income tax rate |
A $30,000 example
A qualifying retiree with $30,000 of armed forces retirement pay exempts the whole $30,000 because it equals the $30,000 limit.
With $50,000 of retirement pay, $50,000 minus $30,000 = $20,000 is left in net income.
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What changes in 2026
No 2026 change is printed in the documents read.
Federal rules
The state’s treatment sits on top of the federal one. The IRS explains the federal side in Publication 3, Armed Forces’ Tax Guide.
Related: whether New Mexico taxes pensions, how New Mexico taxes retirement income, military retirement pay by state, and the military retirement calculator.
Sources
- Instructions for 2025 PIT-ADJ: https://realfile.tax.newmexico.gov/2025pit-adj-ins.pdf
Sources: the primary documents linked above, read on October 4, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.