New Mexico Income Tax Exemptions for Active Duty Pay and Guard Life Insurance

Active duty pay. Section 7-2-5.11: "A salary paid by the United States to a taxpayer for active duty service in the armed forces of the United States is exempt from state income taxation." It is a full exemption with no cap. The section says active duty service; Guard and reserve drill pay is not active duty and is taxable. The Guard life insurance reimbursement. Section 20-4-7.3 creates the service members' life insurance reimbursement fund, which the Department of Military Affairs uses to reimburse New Mexico National Guard members for Servicemembers' Group Life Insurance premiums, and section 7-2-5.10 exempts the reimbursement from income tax. Deployed members. Section 20-1-8, subsection A, paragraph (2) gives a resident member of the Guard or of the armed forces who is called to active duty and deployed an extension to one year after returning to the state to file a state personal income tax return that falls due while the member is on active duty and deployed. Nonresident spouses. A military spouse who is in New Mexico only to be with a servicemember stationed here on orders, and who keeps a domicile elsewhere, does not owe New Mexico tax on wages earned here: under the Servicemembers Civil Relief Act as the Military Spouses Residency Relief Act amended it, 50 U.S.C. 4001(a)(2), the spouse neither loses nor gains a residence for tax purposes by moving with the servicemember, and may elect to use the servicemember's residence instead.