Retire in New Mexico: 2026 Tax & Cost of Living Guide
2022 reform exempts SS for most middle-income retirees. Low property tax and generous capital gains deduction partially offset moderate income tax.
State income tax
Progressive — top rate 5.90%
Social Security
Taxed
Estate tax
None
Property tax
0.55%
How New Mexico Taxes Retirement Income
- Social Security
- Exempt for AGI under $100K single / $150K joint (2022 reform)
- Public pensions (state/federal)
- Taxed
- Private pensions
- Taxed
- 401(k) / IRA withdrawals
- Taxed
Exemption / exclusion
$8,000 retirement exclusion age 65+
What Would You Pay in State Income Tax?
Rough estimates at the top marginal rate (actual effective rate will be lower for most retirees due to brackets, exemptions, and standard deduction):
| Annual Retirement Income | Estimated State Tax | Effective Rate |
|---|---|---|
| $50,000 | $2,950 | 5.9% |
| $100,000 | $5,900 | 5.9% |
| $200,000 | $11,800 | 5.9% |
Capital Gains in New Mexico
40% of long-term capital gains can be deducted
We don't have detailed cost-of-living data for a city in New Mexico yet. See our city guides for 300+ other cities worldwide, or compare New Mexico against other US states below.
States With No Income Tax
Compare Against Other States
All 50 US States + DC
Ranked by tax-friendliness for retirees. Grouped by income-tax type.
Retirement Methodology Calculators
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Tax rates and programs are subject to change. Data is current for 2024–2025. Always consult a qualified tax professional before making relocation decisions.