SANTA FE, NEW MEXICO - SENIORS: TURN SOCIAL SECURITY AND PROPERTY TAXES INTO SAVINGS

2025–2026 Tax Breaks Santa Fe, NM Seniors Are Missing: Social Security, New Deductions, and Property Tax Rebates

If you’re 65 or older in Santa Fe, NM 2025–2026 may be one of the most favorable tax periods you’ve seen in a long time—but only if you know which breaks apply to you and how they fit together.

1. Federal: New “Senior Deduction” and Social Security Tax

Starting with the 2025 tax year, there is a new temporary “Senior Deduction” that adds an extra deduction amount for qualifying seniors through 2028, subject to income limits.

Why this matters for Santa Fe retirees:

• It can lower your taxable income enough to reduce—or even eliminate—federal tax on your Social Security benefits.

• It can also help keep you below thresholds where more of your pension or IRA distributions would otherwise be taxed.

What has to be checked together:

• Your provisional income (AGI + half of your Social Security + tax‑exempt interest) to see how much of your Social Security is taxable.

• How the Senior Deduction plus your standard or itemized deductions combine to get you into the “sweet spot” where Social Security is fully or mostly tax‑free.

2. New Mexico: Social Security Now Largely Exempt

New Mexico has been phasing in a Social Security income tax exemption, so many seniors with modest to moderate incomes no longer pay New Mexico income tax on their benefits.

A few key points:

• New Mexico now excludes Social Security benefits from state taxable income for many retirees who stay under certain income thresholds.

• Higher‑income seniors may still see some or all of their Social Security taxed at the state level, so it isn’t automatically tax‑free for everyone.

Combined with the federal Senior Deduction, a Santa Fe retiree with Social Security plus modest IRA withdrawals can often pay little or no tax on those benefits at both the federal and state level when things are structured correctly.

3. Property Tax Relief for Santa Fe Seniors

Many seniors focus only on income tax, but New Mexico offers property tax rebates that operate like hidden tax relief if you know to claim them.

Two important items:

New Mexico Low‑Income Property Tax Rebate (PIT‑RC)

• Designed for residents with low to moderate income who pay property tax or rent on a principal residence in New Mexico.

• Claimed on the New Mexico PIT return using Form PIT‑RC. The rebate is income‑tested and capped, but it can meaningfully offset property taxes for qualifying seniors in Santa Fe.

Local and senior‑focused property programs

• Various programs help low‑income and older homeowners or renters apply for available rebates or credits at the state and local level.

• Many eligible seniors never apply simply because they don’t realize these programs exist or assume they “make too much” without checking the actual limits.

You may qualify for a New Mexico property tax rebate if:

• You lived in New Mexico the full year.

• Your income is under the current rebate threshold.

• You paid property tax (directly or through rent) on your main home in New Mexico.

4. When Seniors in Santa Fe No Longer Need to File

One of the most common questions I hear is:

“Do I still need to file a tax return if I’m just on Social Security and a small pension?”

In general:

• Federal – Seniors may not need to file if their gross income (including the taxable portion of Social Security) is under the filing thresholds, which are higher for those 65 and older and now influenced by the new Senior Deduction.

• New Mexico – Even if a federal return isn’t required, there can still be good reasons to file a New Mexico return to claim rebates/credits (such as the property tax rebate) or to recover withholding.

It’s usually worth having someone run the numbers at least once rather than guessing and potentially leaving money unclaimed.

5. What Santa Fe Seniors Should Bring to a Tax Meeting

To make sure we can find and claim every break you’re entitled to, I ask seniors to bring:

• All SSA‑1099 (Social Security statements).

• 1099‑R forms for pensions, annuities, and IRA distributions.

• 1099‑INT, 1099‑DIV, 1099‑B from banks and brokerage firms.

• Your property tax bill (or rental information) for your primary residence.

• Any letters or notices related to New Mexico income tax, property tax programs, or rebates.

If you live in Santa Fe or the surrounding area and are 65 or older, I’m happy to review your recent return and your 2025 numbers to see whether you’re missing out on the new Senior Deduction, New Mexico’s Social Security exemption, or property tax rebates. In many cases, we can reduce your tax bill—or even get money back—that you’ve been leaving on the table.

CPA in Santa Fe, New Mexico. David Holmberg, CPA, Balanced Equity Consulting, tax Firm, tax services, tax preparation, tax planning, senior deductions, social security, tax changes 2025.