Issue with net capital gains deduction for New Mexico

[brianfreno]

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]

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

[brianfreno]

That's not good!

[DPGallegos]

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?

[LeticiaF1]

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 

[DPGallegos]

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.

[sk-109]

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.