topic Issue with net capital gains deduction for New Mexico in State tax filing

Issue with net capital gains deduction for New Mexico

brianfreno — Sat, 14 Feb 2026 22:32:43 GMT

For New Mexico, Turbo Tax seems to be using the 2024 PIT-ADJ Instructions, instead of the 2025 PIT-ADJ Instructions. As a result, it is miscalculating the net capital gains deduction limit to be 40% up to $1,000,000, instead of $2,500. The 40% limit now only applies to net capital gain income from the sale of a business that is allocated or apportioned to New Mexico. See below. https://www.tax.newmexico.gov/individuals/online-services-overview/personal-income-tax-forms/

2025:
LINE 16. Net capital gains deduction
You may deduct all or part of your net capital gains reported
and claimed on your federal tax return. You may deduct the
greater of:
• 100% of your net capital gains, not to exceed $2,500; or
• 40% of up to $1,000,000 of your net capital gain income
from the sale of a business that is allocated or apportioned to New Mexico pursuant to Section 7-2-11 NMSA
1978 for the taxable year for which the deduction is
being claimed.

2024
LINE 16. Net capital gains deduction
You may deduct all or part of your net capital gains reported
and claimed on your federal tax return. You may deduct the
greater of:
• 100% of your net capital gains, not to exceed $1,000; or
• 40% of your net capital gains.

Re: Issue with net capital gains deduction for New Mexico

DaveF1006 — Fri, 20 Feb 2026 19:28:07 GMT

This is a known issue in TurboTax that the developers are currently working on. Currently, there is no ETA for the update.

Re: Issue with net capital gains deduction for New Mexico

brianfreno — Fri, 20 Feb 2026 19:36:39 GMT

That's not good!

Re: Issue with net capital gains deduction for New Mexico

DPGallegos — Tue, 24 Feb 2026 21:24:29 GMT

I already filed my return and it was rejected because of this known error in Turbo Tax. How do rectify this? Do I edit my return in Turbo Tax and can I resubmit electronically in a case like this? If I cannot resubmit electronically, then am I required to file by mail? What recourse do I have against Turbo Tax since this is an acknowledged error, and they did not pause my filing prior to my submittal. Can I get a full refund for the product that I paid for, which did not work as advertised and guaranteed?

Re: Issue with net capital gains deduction for New Mexico

LeticiaF1 — Wed, 25 Feb 2026 00:05:35 GMT

Yes, there is a product update to Form PIT-ADJ capital gains, the release affecting New Mexico tax returns. This update is scheduled for release on February 26, 2026. On or after that date, please log in to ensure your product has been updated (online versions update automatically). Once updated, review the New Mexico capital gains deduction by going through the New Mexico return and clarify the type of capital gain deductions, complete a final review and resubmit your return.

How do I contact TurboTax?

@DPGallegos

Re: Issue with net capital gains deduction for New Mexico

DPGallegos — Thu, 26 Feb 2026 16:55:02 GMT

I just installed the latest TurboTax updates to my desktop version of TT Premiere (today 2/26/2026 at 9:50 am MST). It indicated that an update to the New Mexico State was installed but provided no details. Can you inform me how I can tell if this update included the correction to Form PIT-ADJ capital gains, so that I can confidently re-file my NM state return? Thanks.

Re: Issue with net capital gains deduction for New Mexico

sk-109 — Sat, 28 Feb 2026 03:24:43 GMT

In some cases, sale of a rental could be considered a business, therefore the 40% deduction would be valid. I received an update today 2/27/26, with a new "Total Capital Gains" section in the State of NM Step by Step. If you enter the Capital Gains Amount in "Gain on sale of business assets" the Business flag on NM PIT-ADJ line 16B gets set and the 40% deduction is calculated.

Re: Issue with net capital gains deduction for New Mexico

user17759270997 — Sat, 11 Apr 2026 17:11:12 GMT

Hello,

I received a "RETURN ADJUSTMENT NOTICE" from the New Mexico Taxation & Revenue folks, noting the PIT issue. How do I update my return in Turbotax 2025 program, to explicitly file an amended New Mexico return?

Thank You!

Re: Issue with net capital gains deduction for New Mexico

user17759270997 — Sat, 11 Apr 2026 17:13:39 GMT

How do we specifically use Turbotax 2025 to file amended 2025 New Mexico Tax correction?

Re: Issue with net capital gains deduction for New Mexico

CatinaT1 — Tue, 14 Apr 2026 15:46:28 GMT

If you want to make changes or add a document to a tax return that has already been filed and accepted by the taxing agency, you should follow these guidelines.

You must first wait until the initial return is completely processed.
You will have to use the same TurboTax account that you used for the original tax return.
Once you begin your amendment, you'll see your original return. 
The refund calculator will start new at $0 and only reflect the changes in the refund or tax due
Only make changes to the areas of your return that need to be corrected.
You have three years from the date you filed your return or two years after you paid the tax due (whichever is later) to file an amendment

Select your product below and follow the instructions.

Amend TurboTax Online

Amend TurboTax CD/Download