Issue with net capital gains deduction for New Mexico

Forum|Forum|3 months ago
February 14, 2026
2 replies
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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.

DaveF1006

Level 15

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

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brianfrenoAuthor

Level 2

That's not good!

sk-109

Level 2

Post-discussion with NM Tax and Revenue, for a return to be accepted with the 40% Business Deduction, a PIT-B form must be filed. TurboTax needs to change their software to produce a PIT-B form.