What are the best annuity rates in New Mexico today?
The best annuity rates in New Mexico today top out at 7.10% for a 7-year MYGA from Knighthead Life (AM Best A-, simple interest), as of October 18, 2026. Among carriers rated A, A+ or A++ by AM Best, the top rate is 6.20% for 7 years from Sagicor Life. New Mexico MYGA rates run from 5.25% for 2 years to 7.10%, guaranteed for the full term.
Nancy, 67, moved to Albuquerque from Texas and was pleasantly surprised to learn that New Mexico’s Social Security exemption, in effect since tax year 2022, removes state income tax on her Social Security benefits. Withdrawals from the MYGA she purchased to lock in a guaranteed rate are still taxed as ordinary income. For retirees with incomes under $100,000, New Mexico is now one of the more tax-friendly states in the Southwest.
Rates updated: October 18, 2026, 1:03 pm ET · Source: AnnuityRateWatch. Rates shown are for informational purposes only and subject to change without notice. Products marked SI use simple interest, effective compound yield is lower than the stated rate. Minimum premiums shown are for non-qualified (after-tax) funds. Always verify current rates with a licensed annuity professional before purchasing.
- Social Security exemption since 2022: Beginning with tax year 2022, New Mexico exempts Social Security benefits for taxpayers with incomes under $100,000 (single) or $150,000 (married filing jointly).
- Annuity and pension income is still taxable: The exemption covers Social Security benefits only. Annuity distributions and pension income are still taxed as ordinary income in New Mexico.
- Top rate is 5.9%: New Mexico’s top graduated rate is 5.9%. Taxpayers with income above the thresholds do not qualify for the Social Security exemption.
- Standard guaranty protection: New Mexico’s guaranty association covers annuity values up to $250,000 in present value per insurer, the same limit most states use.
- Growing retiree destination: New Mexico’s warmer climate, lower cost of living, and improving tax picture have made it increasingly popular with retirees relocating from Texas, California, and Colorado.
New Mexico Office of Superintendent of Insurance
The New Mexico Office of Superintendent of Insurance (OSI) licenses all agents and regulates annuity products sold in the state. New Mexico has consumer protection rules covering annuity suitability, and all agents must maintain an active license in good standing to sell insurance or annuity products.
| Contact | Details |
|---|---|
| Agency | New Mexico Office of Superintendent of Insurance (OSI) |
| Consumer helpline | 1-855-427-5674 |
| Website | osi.state.nm.us |
| License verification | osi.state.nm.us/consumer-resources/agent-licensing/ |
How New Mexico Taxes Annuity Income
New Mexico changed how it taxes Social Security beginning with tax year 2022. Residents with income under $100,000 (single) or $150,000 (married) can now exempt their Social Security benefits, per the New Mexico Taxation and Revenue Department’s Social Security exemption guidance. Pension, IRA, and annuity distributions are still taxed under the state’s graduated tax structure, with a top rate of 5.9%.
| Annuity Type | New Mexico Tax Treatment | State Rate |
|---|---|---|
| MYGA / Fixed annuity distributions | Taxable as ordinary income | Up to 5.9% |
| Non-qualified annuity interest (gain portion) | Taxable gain portion; basis returned tax-free | Up to 5.9% |
| IRA / 401(k) annuity distributions | Taxable as ordinary income | Up to 5.9% |
| Social Security income | Exempt under income thresholds; otherwise taxable | 0% (exempt) or up to 5.9% |
Tips for Buying an Annuity in New Mexico
- Know your income threshold before choosing a term: New Mexico’s Social Security exemption hinges on staying under $100,000 (single) or $150,000 (married) in total income. When selecting a MYGA term, consider how annual required minimum distributions, Social Security, and annuity withdrawals will combine to affect your position relative to that threshold. Browse current fixed annuity rates with your total income picture in mind before locking in a term.
- Use tax deferral to manage income by year: MYGAs defer interest until you withdraw, which means you can delay income to years where your total will stay under the exemption threshold. This kind of income management is significantly more valuable in New Mexico since 2022 than it was under the old tax rules.
- Know New Mexico’s $250,000 guaranty limit: New Mexico protects annuity values up to $250,000 per carrier, so a buyer placing more than that with a single carrier is only partly covered. For amounts above $250,000, review how state guaranty associations protect policyholders and consider using a second carrier.
- Verify your agent’s New Mexico license: All annuity agents must be licensed through the OSI. Before committing to any contract, use the license lookup at osi.state.nm.us to verify credentials. Our step-by-step guide to buying an annuity walks you through every checkpoint in the buying process.
- Compare offers across multiple carriers: MYGA rates vary by carrier, and not every carrier files the same products in New Mexico. Request a free annuity quote specific to New Mexico to compare licensed carriers and find the best available rate for your chosen term.
Frequently Asked Questions
What changed in New Mexico’s Social Security tax rules in 2022?
Beginning with tax year 2022, New Mexico exempts Social Security benefits from state income tax for taxpayers with income under $100,000 (single) or $150,000 (married filing jointly). The exemption does not cover pension payments, IRA distributions, or annuity withdrawals, which are still taxed as ordinary income. Taxpayers above those income thresholds do not qualify.
Are annuity distributions taxed in New Mexico?
Yes. Annuity distributions are taxed as ordinary income at graduated rates up to 5.9%. New Mexico’s income-based exemption applies to Social Security benefits, not to annuity withdrawals.
What is New Mexico’s annuity guaranty limit?
The New Mexico Life Insurance Guaranty Association protects annuity contract values up to $250,000 in present value per insolvent insurer, per NOLHGA’s compilation of state guaranty association laws. That is the same limit most states use, so buyers placing more than $250,000 should consider a second carrier.
Is New Mexico a good retirement state for annuity buyers?
For retirees with incomes under the Social Security exemption thresholds, New Mexico has become notably more tax-friendly. The combination of the Social Security exemption, the $250,000 guaranty limit, and the relatively moderate cost of living, particularly in the Albuquerque and Santa Fe areas, makes it an increasingly attractive option, especially for retirees relocating from higher-tax states like California or Colorado.
Compare Annuity Rates in Other West States
Shopping for the best rate? Guaranty association limits, premium taxes, and available carriers vary by state. Compare rates in nearby states to find the best fit for your retirement plan.
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You can also compare our current best fixed annuity rates or explore top 5-year MYGA rates nationwide.
