New Mexico Tax Strategy: Land of Enchantment Freedom
New Mexico has a progressive income tax up to 5.9%. Combined with federal taxes, over 43% can go to government. Section 7702 provides tax-free access to your retirement funds.
The New Mexico Tax Challenge
New Mexico's 5.9% top rate combined with federal taxes creates significant retirement income taxation. The state is working to attract retirees but taxes remain.
✅ The Good News
- Growing retirement destination with lower costs
- Strong arts and culture community
- Los Alamos and Sandia provide high-income opportunities
⚠️ The Challenge
- Top income rate 5.9% on retirement distributions
- Combined state/federal can exceed 43%
- Limited Social Security exemption
New Mexico Tax By The Numbers
Section 7702: Your Tax Freedom Solution
Section 7702 of the IRS tax code creates a powerful opportunity: access your retirement funds through policy loans that are completely tax-free—at both federal and state levels. For New Mexico residents, this means escaping both the state tax burden and federal taxation entirely.
Federal Tax-Free
Policy loans bypass federal income tax entirely. No 22-37% federal tax on your retirement income.
State Tax-Free
No New Mexico state income tax on policy loans. Your retirement income stays tax-free at the state level.
New Mexico Professionals We Typically Serve
National Lab Scientists
Los Alamos and Sandia professionals
Successful Artists
Santa Fe gallery owners and artists
Healthcare Professionals
UNM Health and regional specialists
Relocation Retirees
Those drawn by climate and culture
New Mexico Areas We Serve
Matt Nye's Recommendation
"New Mexico is enchanting—the culture, the art, the landscape. Los Alamos and Sandia bring world-class scientists. Santa Fe draws successful artists and retirees."
"But 5.9% state taxes plus federal means over 40% of your 401(k) goes to government. For national lab scientists, successful artists, and affluent retirees, that burden adds up."
"Section 7702 lets you enjoy the Land of Enchantment without the tax devastation. Tax-free retirement income means your savings go toward the lifestyle, not the government. That is real enchantment."
— Matt Nye, 20-Year Industry Veteran
Frequently Asked Questions
How does Section 7702 help New Mexico residents?
Section 7702 allows you to access retirement funds completely tax-free—avoiding New Mexico's 5.9% rate plus federal taxes. This can mean 40%+ more retirement income.
I work at Los Alamos National Lab. Is this strategy good for federal employees?
Absolutely. LANL scientists often have substantial TSP and retirement accounts. Section 7702 diversifies your retirement and provides tax-free income alongside your federal pension.
Santa Fe is expensive despite lower state costs. Does this help?
Yes—tax-free retirement income means more cash flow for Santa Fe living costs. Every dollar saved on taxes is a dollar for art, dining, and the cultural lifestyle you moved here for.
New Mexico is improving retirement tax treatment. Should I wait?
Some improvements are happening, but federal taxes on 401(k) distributions remain substantial. Section 7702 provides complete freedom from both state and federal taxation.
Ready for New Mexico Tax Freedom?
Discover how Section 7702 can eliminate both state and federal taxes on your retirement income. Schedule your free analysis today.
Schedule Your New Mexico Tax Analysis →Free 30-minute consultation. No obligation. No sales pressure.