If you purchase a vehicle in New Mexico
, you must pay the vehicle excise tax, which amounts to 4% of the price paid for the vehicle minus any trade-in credits. One of the most annoying parts about driving is all the extra costs involved. Fuel, maintenance, car insurance
, taxes—it can all be so overwhelming. But, as overwhelming as they may be, avoiding paying these costs can land you in deep financial—and legal—trouble. We're going to walk you through the ins and outs of New Mexico’s vehicle excise tax—how much it is, when you need to pay it, and how.
What is an excise tax in New Mexico?
If you purchase a car in New Mexico—either from a dealer or privately—you’ll have to pay the state vehicle excise tax when you apply for your vehicle’s title. This tax is in place of state and local sales taxes, which do not apply to car sales in New Mexico.
An excise tax is a tax imposed on manufactured items that pose a risk to people's health or the health of the environment.
Items like cigarettes and alcohol are subject to excise taxes because of their associated health risks
Motor vehicles cause environmental damage due to their greenhouse gas emissions, so they are also subject to an excise tax in New Mexico
The details of New Mexico’s vehicle excise tax are spelled out in Chapter 7
of the New Mexico Statutes (NMSA). Here are the quick reference notes: The New Mexico excise tax rate is 4% of your vehicle’s purchase price
The value of any trade-ins is subtracted from the purchase price
The tax is charged once at the time of application for title.
This tax is due when you apply for a title for your new vehicle. According to New Mexico law, you have 30 days to apply for your title after you purchase your vehicle—which means you should pay the New Mexico excise tax within 30 days of purchasing your new wheels.
If you wait longer than 30 days, you will be charged late fees, and you’ll still be on the hook for the excise tax bill.
Calculating your excise tax payment
How much you’ll have to pay for your New Mexico vehicle excise bill will depend on the sale price of your vehicle.
New Mexico charges a one-time 4% excise on all vehicle purchases. State and local sales taxes do not apply to vehicle purchases in the Land of Enchantment.
You can subtract the value of any trade-ins from your vehicle’s purchase price when calculating your excise tax bill.
For example: If you purchase a 2022 Ford Bronco Sport
for $30,410 and you trade-in your old Honda Accord LX
with a value of $9,200, you’ll pay 4% of $21,210, which is $848.40. Penalties for nonpayment
It’s almost impossible to not pay your vehicle excise tax so long as you pay for your vehicle title transfer—the vehicle excise tax is charged when you pay for your title transfer
. You must pay for your title transfer within 30 days of purchase. If you wait more than 30 days, you will be assessed a 50% tax penalty, which raises your excise tax rate to 6%. You will also be charged a $20 late transfer fee.
You might also face a late registration fee if you drive or transport your new vehicle without registration. That charge is $10 or 75% of your registration fee, whichever is greater.
If you fail to pay your transfer or registration fees because of a bad check, you’ll still be on the hook for those fees and the vehicle excise tax, as well as a $20 return check fee and a $30 reinstatement fee. If you pay the incorrect funds, you will still be liable for all the outstanding fees plus a $30 reinstatement fee.
All told, if you pay your registration and transfer fees late with a bad cheque, you could pay upwards of $80 in penalties on top of your fees and the 6% excise tax penalty rate.
If we take our hypothetical Ford Bronco Sport as our example, that would increase your excise tax bill from $848.40 to $1,272.60.
How to avoid excise tax in New Mexico
For the most part, there’s no avoiding New Mexico’s vehicle excise tax—although there are some exceptions.
According to Chapter 66, Article 6, Section 7
of the NMSA the following people are exempt from the tax: Veterans who have suffered the loss of one or both legs at or above the ankle
Veterans who have suffered the loss of both arms at or above the wrist
Here are some other exemptions:
Vehicles that have been modified to accommodate the purchaser’s disability
Gifted vehicles, since there is no tax on a gift (and no sales price)
Vehicles purchased out of state 30 or more days before the owner moves to New Mexico
Vehicles registered out-of-state that have been previously titled in New Mexico and have been continuously owned by the same owner
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