Updated October 29, 2026. Quick answer: Taxable, as best the documents show. The 2025 PIT-ADJ instructions list “an amount equal to $30,000 of armed forces retirement” and Railroad Retirement annuities as exempt, but print none for civil service retirement. For age 65 or older, “You may be eligible for an exemption of up to $8,000”.
What New Mexico does with a FERS or CSRS annuity
| Question | What the New Mexico documents say |
|---|---|
| What the source says | The 2025 New Mexico instructions list no exemption for federal civil service retirement pay and only tell U.S. Civil Service retirees how to request New Mexico income tax withholding from their retirement pay, while armed forces retirement pay and Railroad Retirement annuities do get their own exemptions. |
| Change for 2026 | No 2026 change is printed in the state documents cited here. |
How this differs from other pensions in New Mexico
A federal civil service pension would appear to get no special treatment, so the same rules would apply as for other pensions and IRA distributions that PIT-1 groups with it. The age 65 or older exemption of up to $8,000 applies to any filer who qualifies, whatever the income source. See also Does New Mexico tax pensions? and military retirement pay.
FERS, CSRS and your TSP
The state documents cited here do not address TSP withdrawals, beyond naming IRA distributions in the same pension and retirement pay passage. For the Thrift Savings Plan itself, see state tax on TSP withdrawals and the TSP calculator.
Where this rule sits on the New Mexico return
Armed forces retirement pay and Railroad Retirement annuities are listed on the PIT-ADJ schedule as exempt, so the absence of any civil service line is the main evidence for this answer.
Checks before you rely on this answer
- Check the PIT-ADJ line list for your tax year before filing, since this answer rests on what the 2025 list leaves out.
- Ask your retirement pay office about New Mexico withholding, which the PIT-1 instructions say U.S. Civil Service retirees may request.
- Test the age exemption separately, because its amount depends on filing status and federal adjusted gross income.
What the New Mexico documents leave open
Neither document names CSRS or FERS, so taxable treatment is inferred from the absence of a listed exemption. The PIT-1 instructions do tell U.S. Civil Service retirees how to ask for New Mexico withholding from their retirement pay. The rate tables, the exemption table amounts and any statute text were not read, and no 2026 booklet exists yet.
Common mistakes
- Assuming the armed forces exemption covers civil service pay. The $30,000 exemption is for armed forces retirement pay.
- Treating the age exemption as a federal pension rule. The exemption of up to $8,000 applies to any qualifying filer whatever the income source.
Related: Does New Mexico tax pensions?, New Mexico military retirement pay, and FERS, TSP and Social Security sequencing.
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Answer againSources
- Instructions for 2025 PIT-1 New Mexico 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
Read from the state documents linked above on October 29, 2026. General information, not tax advice.