State tax filing

You are correct the PIT ADJ form instructions for line 24, Social Security Exemption can be misleading.  

The examples used for the PIT ADJ line 24 are meant to show the affect of the 100,000 max Federal Adjusted Gross Income (AGI). The amount of social security is irrelevant.  Whatever amount of social security benefits paid that is included in the federal AGI is what is subtracted from the NM taxable income as long as the federal AGI does not exceed the amounts listed in the table.  This complies with NM tax law. 

However, the instructions say "Enter the amount of social security income included in your Adjusted Gross Income (AGI) up to the AGI listed in Table 3 based on your filing status from PIT-1, line 7."  This would indicate that even if your Federal AGI was over the amount listed in the table for your filing status, you could enter an exemption amount that is social security benefits received that are included in Federal AGI all the way up to that exemption limit.  This does not comply with NM tax law.  

Here is an extract from the NM Law signed by the Governor. 

SECTION 7. A new section of the Income Tax Act is enacted to read: "EXEMPTION--SOCIAL SECURITY INCOME.--An individual may claim an exemption in an amount equal to the amount included in adjusted gross income pursuant to Section 86 of the Internal Revenue Code, as that section may be amended or renumbered, of income includable except for this exemption in net income; provided that the individual's adjusted gross income shall not exceed: 

A. seventy-five thousand dollars ($75,000) for married individuals filing separate returns; 

B. one hundred fifty thousand dollars ($150,000) for heads of household, surviving spouses and married individuals filing joint returns; and 

C. one hundred thousand dollars ($100,000) for single individuals."