Chapter 6, Section D:
Motor Vehicle Excise Tax - Basics


Revised October 18, 2011



Because the Motor Vehicle Excise Tax Act (Chapter 7, Article 14 NMSA 1978) is not included in your Traffic Laws Manual, it is included in its entirety in Section E of this chapter.

Here are the basics:

When is the Motor Vehicle Excise Tax imposed and paid?

(Sec. 7-14-3) The Motor Vehicle Excise Tax (MVET) is imposed, with specific exceptions, "upon the sale in this state of every vehicle ... required under the Motor Vehicle Code ... to be registered in this state."

Note: Because all-terrain vehicles (ATVs) are subject to the registration and titling provisions of the Motor Vehicle Code, the MVET is imposed on the sale of ATVs (3.11.4.16 NMAC). Boats, because they are not vehicles, are not subject to the MVET, but are subject to a separate 5% boat excise tax (Sec. 66-12-6.1).

(Sec. 7-14-5) The tax is paid at the time of application for a certificate of title.
 

Amount of tax based on price paid

(Sec. 7-14-4) The MVET rate three percent (3%) and is applied to the price paid for the vehicle. The value of any vehicle traded in on the purchase of another vehicle may be deducted (3.11.4.13 NMAC).

Effective February 13, 2009, and as described in PQU#86, the "price paid" for a vehicle for the purpose of calculating the MVET is now defined in rule (3.11.4.7D NMAC) as below:

"Price paid" is the dollar amount to which the motor vehicle excise tax is applied and (except as provided in Section 7-14-4 NMSA 1978 if the price paid does not represent the value of the vehicle) is the total net purchase price paid by the buyer for the vehicle itself, including any deposit or down payment, at the time of sale. “Price paid” includes any charges to the buyer for accessories, transportation, delivery and dealer preparation. “Price paid” is reduced by the value of any vehicle trade-in and by any discounts or rebates that are applied to the buyer’s balance due at time of sale. “Price paid” is also reduced by the value of any manufacturer’s or other rebate that is contractually guaranteed to the buyer at time of sale, even though the rebate is received by the buyer at a later date.

(Sec. 7-14-7) If a vehicle is acquired out-of-state, and another state's gross receipts, sales, compensating or similar tax was paid, the amount of the tax paid may be credited against the MVET due on the same vehicle.
 

Rebates, discounts and dealer prep fees

It has been MVD practice for some years that rebates are not considered a reduction in price, and that dealer transportation and preparation fees are not considered an increase in price paid, for the purpose of calculating the MVET. Some informally published MVET calculation guidelines have been less than clear as to how dealer discounts should be treated.

The new rule defining "price paid" now makes it clear that the price to which the MVET tax is applied is the "net purchase price paid by the buyer for the vehicle itself" and that the price paid does include any dealer prep and transportation fees and is reduced by dealer discounts and by any manufacturer's rebate that is paid or contractually guaranteed at the time of sale.
 

Value exception to price paid as basis for MVET

By rule (3.11.4.14 NMAC), the price paid for a used vehicle cannot be relied upon to indicate the reasonable value of the vehicle. Instead, the rule provides for a presumption that the value of the vehicle transferred is no less than the average trade-in (wholesale) value for the make, model and year of the vehicle as reported by the National Automobile Dealers Association (N.A.D.A.).

Accordingly, As described in PQU#81rev2, effective January 1, 2009, the value used to calculate the Motor Vehicle Excise Tax on the sale of a used motor vehicle shall be the higher of the declared purchase price or 80% of the N.A.D.A. average trade-in or wholesale value of the vehicle, with four limited exceptions:

  1. If the sale is by a licensed dealer, and a dealer invoice is presented, we will accept the price paid that is indicated on the invoice, as we would for a new car sale.
  2. If no N.A.D.A. average trade-in or wholesale value is available online (as is the case, for example, for passenger vehicles with model years prior to 1990), we will accept the stated price from the title or bill of sale.
  3. If the vehicle’s title has a salvage brand, we will accept the stated price from the title or bill of sale.
  4. If the N.A.D.A. web site gives a “rough trade-in” value and a “clean trade-in” value, but no “average trade-in” (as is the case for motorcycles) use a value that is 80% of the lower, rough trade-in value.

Note: It is not up to field office personnel to determine or negotiate the actual value of a vehicle. The customer may rebut the presumption by presenting evidence sufficient to establish a lower value. But merely confirming the price paid is not evidence of reasonable value. If the customer wishes to prove that the actual value of the vehicle is lower than the N.A.D.A. value applied, he may do so by submitting a Request for Refund (MVD-10208), together with sufficient documentation (typically in the form of an auto body shop estimate of repairs needed or a formal statement of value from a licensed dealer or other professional appraiser).
 

Tax penalty for late titling

(Sec. 7-14-8) A penalty of 50% of the MVET is imposed on any person who lives in New Mexico and either a) accepts transfer of a vehicle in New Mexico but fails to apply for a certificate of title within 90 days; or b) accepts transfer outside the state and fails to apply for a certificate of title within 90 days of bringing the vehicle into New Mexico.

The 50% add-on penalty has the effect of increasing the tax rate to 4.5% (3% x 1.5 = 4.5%).
 

Statutory exemptions from the MVET

(Sec. 7-14-6) The following are exempt from payment of the Motor Vehicle Excise Tax:

  1. A person who acquires a vehicle out of state, and for personal use, at least 30 days before moving to New Mexico.
     
  2. A person applying for New Mexico title on a vehicle registered in another state, if the person has previously registered and titled the vehicle in New Mexico and has continued to own the vehicle.
     
  3. The state of New Mexico and any political subdivision of the state.
     
  4. A person who has a disability at the time the person purchases a vehicle and can prove  that modifications have been made to the vehicle that 1) are due to the person's disability; and 2) are necessary to enable the person to drive or be transported in the vehicle.
     
  5. A New Mexico resident who served in the armed forces of the United States and who suffered, while serving or from a service-connected cause, 1) the loss or complete and total loss of use of one or both legs at or above the ankle; or 2) one or both arms at or above the wrist.

    Note: An individual who qualifies for the "veteran amputee" excise tax exemption may not qualify for issuance of a mobility impaired (HP) plate or placard (PQU#59rev2). (Sec. 66-3-16)
     
  6. A person who acquires a vehicle for subsequent lease if: 1) the vehicle is not used other than for lease or sale in the ordinary course of business; 2) the lease is for more than six months; 3) the receipts from the subsequent lease are subject to the gross receipts tax; and 4) the vehicle does not have a GVW of over 26,000 pounds.
     
  7. From July 1, 2004 through June 30, 2009, the purchaser of a new gasoline-electric hybrid vehicle with an EPA fuel economy rating of at least 27.5 mpg, at the time of issuance of the vehicle's original certificate of title.

Note: Exemptions D and E, above, reflect a change in statute, effective July 1, 2007. A vehicle that qualifies for a handicap (HP) plate no longer automatically qualifies for the exemption. However, the automatic exemption for vehicles owned by veteran amputees is retained.
 

Exemptions by Rule - U.S. and NATO

  • (3.11.4.9 NMAC)
    Because issuance of a certificate of title is not required for vehicles sold to the United States, the motor vehicle excise tax does not apply to such vehicles.
     
  • (3.11.4.10 NMAC)
    Because issuance of a certificate of title is not required with respect to vehicles sold or transferred to a NATO force, the motor vehicle excise tax does not apply to such vehicles. A “NATO force” is any NATO signatory's military unit or force or civilian component thereof present in New Mexico in accordance with the North Atlantic Treaty.
     
  • (3.11.4.11 NMAC)
    Also exempt, by operation of the provisions of the North Atlantic Treaty, is the sale or transfer of a vehicle to a member of a NATO force, including the the military and civilian personnel of the NATO force and their dependents.