New Mexico Veteran Tax Exemptions 2026

New Mexico exempts VA disability compensation from state income tax, giving veterans a clean break on their state return. At the top disability rating, qualifying veterans may be eligible for a full property tax exemption on their home, with a partial reduction available at lower ratings. Read on to see which benefit applies to you and how to get it on the books.

Does New Mexico tax VA disability income?

No. New Mexico does not tax VA disability compensation. The state treats it the same way the federal government does, which means it is left off your taxable income entirely. Whether you are rated 10 percent or 100 percent, your VA disability pay is not taxed by New Mexico.

New Mexico property tax exemption for disabled veterans

$4K reduction or full exemption at 100% P&T. $4K reduction, with a full exemption at 100% P&T.

Reaching the top rating can mean a full exemption that erases your property tax bill, while veterans at lower ratings still qualify for a meaningful reduction.

What rating do you need in New Mexico?

The size of your break depends on your combined VA rating. In New Mexico, the full break is reserved for veterans at the top rating, usually 100 percent or 100 percent Permanent and Total. Lower ratings may still qualify for a smaller break, so it is worth checking with your county even if you are not yet at 100 percent. Not sure what your combined rating works out to? Run it through our VA disability calculator first, and if you are aiming for the top tier, check whether you qualify for Permanent and Total status.

How to claim your New Mexico exemption

1. Confirm your current combined rating and whether it is Permanent and Total. Your VA award letter shows both.
2. Gather your DD-214 and your VA disability award letter. Most New Mexico offices ask for both.
3. Contact your county tax assessor for the property tax exemption, and the your state tax agency or Department of Veterans Affairs for the income side.
4. File before your county deadline. Many counties require you to apply once, then renew only if your rating changes.

Always confirm the current figures and deadlines with your county assessor and the New Mexico Department of Veterans Affairs before you rely on them. Rules and dollar amounts change year to year.