Editor’s Note: Once a week during the legislative session, Journal Capitol Bureau reporters will answer questions posed by readers. You can submit questions at the Journal’s website: ABQJournal.com/legislature.
Q. New Mexico is one of 11 states that taxes Social Security. The elderly live on fixed incomes, find it difficult to find employment to offset inflation. – Glenn Ables
A: New Mexico had been one of roughly a dozen states that levy a tax on Social Security retirement income.
However, a tax package signed last year by Gov. Michelle Lujan Grisham changed that by exempting Social Security benefits from taxation for individual retirees who make less than $100,000 annually.
The change took effect for the 2022 tax year and set the income cutoff for married couples filing jointly at $150,000 per year.
The issue had prompted ample debate at the Roundhouse in recent years, with supporters of the proposals calling it unfair for the state to tax retirement income based on previous earnings.
But critics of the bills argued the move would primarily benefit higher-income New Mexico retirees, as married couples filing jointly who are both age 65 or older with $28,700 in annual income or less currently do not have a tax liability even without the exemption.
While no bills have been filed yet, there could be additional debate on the issue during this year’s session, including possible attempts to adjust the income caps.