New Mexico Laws and Incentives

Listed below are the summaries of all current New Mexico laws, incentives, regulations, funding opportunities, and other initiatives related to alternative fuels and vehicles, advanced technologies, or air quality. You can go directly to summaries of:

State Incentives

Biodiesel Blending Facility Tax Credit

A tax credit is available for up to 30% of the cost of both purchasing and installing equipment used to produce biodiesel blends containing at least 2% biodiesel (B2). The tax credit is limited to $50,000 per facility and is claimed against gross receipts tax or compensating tax. Individuals or organizations must apply for and obtain a certificate of eligibility from the New Mexico Energy, Minerals, and Natural Resources Department before claiming the credit. The credit may be carried forward for four years from the date of the certificate of eligibility. For more eligibility and application details, refer to the Biodiesel Blending Facility Tax Credit page. (Reference New Mexico Statutes 7-9-79.2)

Biodiesel Blending Facility Loading Fee Deduction

In calculating the annual petroleum products loading fee, a facility owner may deduct the number of biodiesel gallons delivered to be blended into petroleum products. The total deducted amount must be documented in the tax return associated with the facility in a format the New Mexico Taxation and Revenue Department approves. For more information, see the Conservation & Preservation Tax Credits website. (Reference New Mexico Statutes 7-13A-5)

Biofuels Production Tax Deduction

The cost of purchasing qualified biomass feedstocks to be processed into biofuels, as well as the associated equipment, may be deducted in computing the compensating tax due under the New Mexico Gross Receipts and Compensating Tax Act. For the purpose of this incentive, biofuels include ethanol, methanol, methane, and hydrogen. (Reference New Mexico Statutes 7-9-98)

Alternative Fuel and Advanced Vehicle System Manufacturing Incentive

The Alternative Energy Product Manufacturers Tax Credit is a credit against combined reporting taxes (gross receipts, compensating, and withholding) for qualified manufacturers of alternative energy products, which includes hydrogen and fuel cell vehicle systems, and electric and hybrid electric vehicles. The credit is limited to 5% of qualifying expenditures, and manufacturers must fulfill job creation requirements to be eligible. Qualified manufacturers must apply for and receive approval from the New Mexico Taxation and Revenue Department before they may claim the credit. For more information, including eligibility and application details, refer to the Alternative Energy Product Manufacturers Tax Credit Claim Form. (Reference New Mexico Statutes 7-9J-1 through 7-9J-8)

Alternative Fuel Tax Exemption

Alternative fuel distributed by or used for U.S. government, state government, or Indian nation, tribe, or pueblo purposes is exempt from the state excise tax. (Reference New Mexico Statutes 7-16B-5)

Biodiesel Tax Deduction

Entities and individuals that receive or manufacture and deliver biodiesel within the state for blending or resale are eligible for a tax deduction for the fuel. (Reference New Mexico Statutes 7-16A-10)

Idle Reduction Weight Exemption

Any vehicle or combination of vehicles equipped with idle reduction technology may exceed the state's gross and axle weight limits by up to 400 pounds to compensate for the additional weight of the idle reduction technology. (Reference New Mexico Statutes 66-7-410)

Laws and Regulations

Biodiesel Blend Mandate

All diesel fuel sold for use in on-road motor vehicles to state agencies, political subdivisions of the state, and public schools must contain at least 5% biodiesel (B5). Effective April 10, 2017, all diesel fuel sold to consumers for use in on-road motor vehicles is mandated to contain at least B5. (Reference New Mexico Statutes 57-19-28 and 57-19-29)

Alternative Fuel Vehicle (AFV) and Hybrid Electric Vehicle (HEV) Acquisition Requirements

A minimum of 75% of state government and educational institution fleet vehicles purchased must be HEVs or bi-fuel or dedicated AFVs. Vehicles must meet or exceed the federal corporate average fuel economy standards. Certified law enforcement pursuit vehicles and emergency vehicles are exempt from this requirement. The New Mexico Energy, Minerals and Natural Resources Department may grant additional exemptions based on the availability and suitability of vehicles, as well as fuel availability and cost.

Up to $5 million is authorized for a revolving loan fund for AFV acquisitions by state agencies, political subdivisions, and educational institutions. The maximum amount of a loan per vehicle must not exceed the actual cost of acquiring the vehicle or $3,000, whichever is less. Projected fuel cost savings from using the AFV is considered when the loan repayment schedule is developed.

(Reference New Mexico Statutes 13-1B-1 through 13-1B-7)

Neighborhood Electric Vehicle (NEV) Access to Roadways

A NEV is defined as a four-wheeled electric motor vehicle that has a maximum speed of at least 20 miles per hour (mph) but not more than 25 mph and complies with the federal requirements specified in Title 49 of the Code of Federal Regulations, section 571.500. NEVs may only be used on roads with speed limits of up to 35 mph, though NEVs may cross roads or highways with greater speed limits at intersections or permitted crossing points. A local authority or the New Mexico Department of Transportation may prohibit the operation of NEVs on any road under its jurisdiction if the governing body determines that the prohibition is necessary in the interest of safety. (Reference New Mexico Statutes 66-1-4.12 and 66-3-1103)

Alternative Fuel Definition

Alternative fuels are defined as natural gas, liquefied petroleum gas (propane), electricity, hydrogen, fuel mixtures containing not less than 85% ethanol or methanol, and fuel mixtures containing not less than 20% vegetable oil, or a water-phased hydrocarbon fuel emulsion in an amount not less than 20% by volume. Biodiesel is defined as a renewable, biodegradable, mono alkyl ester combustible liquid fuel that is derived from agricultural plant oils or animal fats and meets current ASTM biodiesel standards. (Reference New Mexico Statutes 13-1B-2 and 57-19-27)

Alternative Fuels Tax

Alternative fuels subject to the New Mexico excise tax include liquefied petroleum gas (propane), compressed natural gas (CNG), and liquefied natural gas (LNG). The excise tax imposed on propane is $0.12 per gallon, and the excise tax imposed on CNG and LNG is $0.133 and $0.206 per gallon, respectively. A gallon is measured as 3.785 liters of propane, 5.66 pounds (lbs.) or 126.67 standard cubic feet of CNG, and 6.06 lbs. of LNG. Alternative fuel purchased for distribution is not subject to the excise tax at the time of purchase or acquisition, but the tax is due on any alternative fuel at the time it is dispensed or delivered into the tank of a motor vehicle. Alternative fuel distributors must be licensed by the state. For tax forms and instructions, refer to the New Mexico Taxation and Revenue Department website. (Reference New Mexico Statutes 7-16B-1 through 7-16B-10)