Calculating New Mexico’s Car Sales Tax
This guide explains how New Mexico's vehicle tax works, from the initial calculation to the final payment, ensuring a straightforward titling process.
When purchasing a new or used vehicle in New Mexico, a tax is levied when you officially title and register it. This one-time charge, based on the vehicle’s value, is collected by the state’s Motor Vehicle Division (MVD) as part of the registration process. Understanding how this tax is calculated and what paperwork is needed can make the process more predictable.
Calculating New Mexico’s Motor Vehicle Excise Tax
The tax on vehicle purchases is formally known as the Motor Vehicle Excise Tax (MVET), which is distinct from a standard sales tax. The statewide MVET rate is 4% and is calculated on the vehicle’s net sales price. This tax is due whenever a vehicle is titled in the state, as the MVD presumes a sale has occurred with every transfer of title.
A significant factor that can lower the taxable amount is a trade-in. If you trade in another vehicle as part of the purchase, its value is subtracted from the new vehicle’s price before the 4% tax is applied. For example, if you buy a car for $30,000 and receive a $7,000 credit for your trade-in, the MVET is calculated on the remaining $23,000, not the full purchase price. This results in a tax of $920.
For vehicles purchased from a private party, there is an additional valuation rule. The MVD compares the sales price you report to 80% of the vehicle’s average wholesale value as listed by the National Automobile Dealers Association (N.A.D.A.). The tax is then based on whichever of these two figures is higher.
Certain transactions are exempt from the MVET. The most common exemption applies to vehicles transferred as genuine gifts. To qualify, both the person giving the vehicle and the person receiving it must sign a notarized affidavit affirming under penalty of perjury that no payment was exchanged. Vehicles acquired through inheritance are also exempt from this tax.
Documents Needed to Pay the Tax
Before visiting the MVD, you must gather and complete several documents to ensure a smooth transaction. Having this paperwork prepared is a necessary step for titling the vehicle and paying the associated excise tax.
The foundation of your transaction is the Bill of Sale, which acts as the official receipt. This document must list the names of the buyer and seller, the final vehicle price, the sale date, and the Vehicle Identification Number (VIN). The vehicle’s title must also be correctly signed over by the seller to you to officially transfer ownership.
You will also need to complete an Application for Title and Registration, which is available on the New Mexico MVD’s website. Finally, you must have proof of active New Mexico auto insurance, such as a current insurance card or a copy of your policy declaration page.
How to Pay the Tax When Registering Your Vehicle
With your documents in hand, the final step is to submit your paperwork and payment. This process takes place at a New Mexico MVD Field Office or one of its authorized private partners, which can handle the entire process in a single visit.
When you arrive, you will present your package of documents to an MVD agent. The agent will review the paperwork, officially calculate the Motor Vehicle Excise Tax based on your sales price, and verify any trade-in credits.
The MVET is paid together with all other applicable titling and registration fees as one total amount. MVD offices accept several forms of payment, including cash, personal checks, and major credit or debit cards. After your payment is processed, you will receive your new license plate and a temporary registration document, while the official Certificate of Title is mailed to you later.