Updated October 5, 2026. Quick answer: Yes. New Mexico taxes annuity income through federal adjusted gross income; the PIT-1 instructions list “an annuity; a pension, Railroad Retirement, other retirement pay” among the payments to report, and no general pension or annuity exclusion is printed.
More state retirement-income schedules, line by line: New Mexico PIT-ADJ retirement lines.
How New Mexico treats annuity income
| Item | What the documents say |
|---|---|
| Treatment | Taxed; no general pension or annuity exclusion |
| Railroad Retirement | Railroad Retirement Act annuities are exempt (PIT-ADJ: “These types of income are exempt from state income taxes.”) |
| Armed forces | An armed forces retiree may exempt “amount equal to $30,000 of armed forces retirement” |
| Age 65 or older | “You may be eligible for an exemption of up to $8,000”, depending on federal adjusted gross income; it is not specific to annuities |
| Rates | The PIT-1 instructions read do not print the rate tables, so this page states no rate |
| Purchased annuities | The documents read do not distinguish annuities bought outside a retirement plan |
A $24,000 example
A retiree with $24,000 of annuity payments and no other adjustment reports all of it, because no general exclusion applies.
A filer 65 or older who qualifies for the full $8,000 exemption would reduce the amount at stake from $24,000 to $16,000, computed as $24,000 minus $8,000; the exemption depends on federal adjusted gross income and is not annuity-specific.
A Railroad Retirement annuity of $24,000 is exempt and adds $0.
What changes in 2026
The latest documents read print no 2026 change to the way annuity income is taxed.
Federal rules
The state’s treatment sits on top of the federal one. The IRS explains the federal side in Topic no. 410, Pensions and Annuities and Publication 575, Pension and Annuity Income.
Related: whether New Mexico taxes pensions, how New Mexico taxes retirement income, state tax on 401(k) and IRA withdrawals, how a surrendered annuity is taxed, and pension and annuity decisions.
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Answer againSources
- 2025 PIT-1 Instructions (New Mexico Taxation and Revenue Department): https://realfile.tax.newmexico.gov/2025pit-1-ins.pdf
- 2025 PIT-ADJ Instructions, Schedule of Additions, Deductions, and Exemptions (New Mexico Taxation and Revenue Department): https://realfile.tax.newmexico.gov/2025pit-adj-ins.pdf
- House Bill 252, 56th Legislature, Second Session 2024 (New Mexico Legislature): https://www.nmlegis.gov/Sessions/24 Regular/bills/house/HB0252.PDF
Sources: the primary documents linked above, read on October 5, 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.