Updated October 16, 2026. Quick answer: New Mexico has no general retirement-income exclusion in the documents read: the PIT-1 instructions start from federal adjusted gross income and list “Sick pay, tuition or IRA distribution, annuity, pension or retirement pay” among the income types to collect forms for, and neither document names 403(b) or 457(b) plans.
New Mexico at a glance
| Item | What the documents say |
|---|---|
| How the state treats 403(b) and 457(b) withdrawals | Taxed through federal adjusted gross income; the documents read do not name these plans |
| Do the state’s documents name these plans? | The documents read name neither 403(b) nor 457(b) plans |
| Retirement exclusion or credit | An exemption of up to $8,000 for age 65 or older or blind filers, based on filing status and income, and a separate armed forces retirement pay exemption |
| Public-employee pension rule | No public-employee pension exclusion is described |
| Rate in the documents read | Not printed in the documents read |
| Changed for 2026? | The documents read describe no 2026 change |
What the New Mexico documents say
The PIT-ADJ instructions describe “You may be eligible for an exemption of up to $8,000 based” on filing status and federal adjusted gross income for a taxpayer who is 65 or older or blind. It is not limited to retirement income, and it shrinks as income rises.
The same instructions give military retirees a separate line, “Exemption for armed forces retirement pay”., with a $30,000 figure.
Withholding and federal tax
Whether a state withholds is a separate rule: see state withholding on retirement withdrawals. Federal rules: 403(b) withdrawal rules and 457(b) withdrawal rules. The IRS says pension and annuity payments from a qualified employer plan have “all or some portion of the amounts you receive may be taxable”.
What the documents do not say
- The documents read do not name 403(b) or 457(b) plans.
- They print no rate table, so this page states no rate.
- The documents are the 2025 instructions.
Common mistakes
- Assuming New Mexico’s rule for a 401(k) or IRA also covers a 403(b) or 457(b): read whether its documents name the plan.
Related: whether New Mexico taxes 401(k) and IRA withdrawals, New Mexico retirement taxes, whether New Mexico taxes pensions, 403(b) withdrawal rules, 457(b) withdrawal rules, and state withholding on retirement withdrawals.
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Answer againSources
- Instructions for 2025 Form PIT-1, Personal Income Tax Return: https://realfile.tax.newmexico.gov/2025pit-1-ins.pdf
- Instructions for 2025 PIT-ADJ, Schedule of Additions, Deductions, and Exemptions: https://realfile.tax.newmexico.gov/2025pit-adj-ins.pdf
- IRS Tax Topic 410, Pensions and annuities: https://www.irs.gov/taxtopics/tc410
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.