Updated October 16, 2026. Quick answer: Only if you ask. New Mexico’s guide to withholding says payers need not withhold on pensions “unless requested to do so by the recipients of the payments”.
New Mexico pension withholding at a glance
| Item | What the documents say |
|---|---|
| Is state withholding required on regular pension payments? | No. New Mexico does not require the payer to withhold unless you request it |
| Default rate if you give the payer no form | None stated; the payer withholds the amount you request |
| Lump sum or one-time payment | The documents read give no separate lump-sum rule |
| Form to start, change or stop it | No state form named; the request is in writing to the payer |
| Changed for 2026? | No change stated |
What the New Mexico documents say
The Taxation and Revenue Department’s FYI-107 guide says a payor of pension and annuity payments is not required to withhold New Mexico income tax unless the recipient asks. A recipient “requests in writing that the payor deduct and withhold an amount”.
The guide says that after a request “the payor is required to deduct and withhold the amount requested”, “unless the requested amount is less than $10.00”.
What a mover should know
This page is about New Mexico as a state of residence. An instruction line written for a nonresident or part-year filer is not the rule for a resident, and none of the documents read settles a part-year or two-state case, so check each state’s own rule. The federal side is the same everywhere; CMG’s federal 20% withholding on a pension lump sum page covers it, state tax withholding on IRA and 401(k) withdrawals in New Mexico covers the account side, and state withholding on retirement withdrawals lists the other states checked.
What the documents do not say
- The only document read is the FYI-107 guide, revised in October 2018. It names no state form, does not say how to stop withholding, and gives no lump-sum rule or 2026 change.
Common mistakes
- Assuming the payer is withholding for the state because it withholds for the IRS: in a voluntary state nothing is withheld until you ask the payer in writing to withhold an amount.
- Assuming the answer for one state applies to another, or that state withholding settles the state tax owed at filing.
Related: state tax withholding on IRA and 401(k) withdrawals in New Mexico, New Mexico retirement taxes, whether New Mexico taxes pensions, state withholding on retirement withdrawals, and retirement withholding calculator.
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Answer againSources
- FYI-107, An Individual’s Guide to New Mexico Withholding Tax (Rev. 10/2018): https://realfile.tax.newmexico.gov/FYI-107%20-%20An%20Individual’s%20Guide%20To%20New%20Mexico’s%20Withholding%20Tax.pdf
- IRS Tax Topic 413, Rollovers from retirement plans: https://www.irs.gov/taxtopics/tc413
Sources: the primary documents linked above, read on October 16, 2026. General information, not tax advice. Your own facts decide the outcome, and a tax professional or the state agency itself is the right place to confirm anything consequential.