Does New Mexico tax pensions and social security?

Does New Mexico tax pensions and social security?

Yes, New Mexico does tax both pensions and social security benefits. While some states offer tax breaks for retirees, New Mexico is not one of them. Residents in New Mexico are required to pay state income tax on their pension income as well as their social security benefits.

FAQs:

1. Can New Mexico residents exclude any of their social security benefits from state taxation?

No, New Mexico does not offer any exclusions or deductions for social security benefits when it comes to state income tax.

2. Are military pensions taxed in New Mexico?

Military pensions are fully taxable in New Mexico. This includes pensions received from all branches of the military, whether active duty or reserves.

3. Are federal government pensions subject to state income tax in New Mexico?

Yes, federal government pensions are treated the same as any other pension income in New Mexico and are subject to state income tax.

4. How much state income tax do New Mexico residents have to pay on their pension income?

New Mexico’s state income tax rates range from 1.7% to 5.9%. The amount of tax owed on pension income will depend on a retiree’s total income and filing status.

5. Do retirees in New Mexico have to file a state income tax return?

Yes, retirees in New Mexico are required to file a state income tax return if they meet the state’s filing requirements. This includes reporting all sources of income, including pensions and social security benefits.

6. Are there any exemptions for low-income retirees in New Mexico?

New Mexico does offer a Low-Income Comprehensive Tax Rebate for eligible residents, but this program is not specifically tailored to retirees. Retirees may qualify for this rebate if they meet the income thresholds.

7. Can retirees in New Mexico deduct medical expenses from their state income taxes?

Retirees in New Mexico may be able to deduct medical expenses as an itemized deduction on their state income tax return. However, the deduction is subject to certain limitations and must meet certain criteria.

8. Are there any credits or deductions available to retirees in New Mexico to offset the taxes on their pension income?

New Mexico does not offer any specific credits or deductions for retirees to offset the taxes on their pension income. Retirees are subject to the same tax rates and rules as other residents.

9. Do retirees who move to New Mexico from a state that does not tax pensions have to pay taxes on their pension income?

Yes, retirees who move to New Mexico from a state that does not tax pensions may be surprised to find that their pension income is taxable in New Mexico. The state taxes pension income regardless of where it was earned.

10. Can retirees in New Mexico avoid paying taxes on their pension income by relocating to a state that does not tax pensions?

While moving to a state that does not tax pensions may help retirees avoid paying state income tax on their pension income, it is important to consider the overall cost of living and quality of life in the new state before making such a decision.

11. Do retirees in New Mexico have to pay federal income tax on their pension income in addition to state income tax?

Yes, retirees in New Mexico are subject to both federal and state income tax on their pension income. Federal tax rates and rules may differ from the state’s tax rates.

12. Are there any changes to New Mexico’s tax laws that could affect retirees in the near future?

Tax laws are subject to change, so it is always a good idea for retirees to stay informed about any updates or developments that may impact their tax situation. Consult with a tax professional for the most current information and advice.

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