The Motor Vehicle Excise Tax (MVET) in New Mexico is a tax applied to every sale of a motor vehicle that requires registration within the state. Essentially, whenever a vehicle title is transferred, it is generally presumed that a sale has occurred, making the motor vehicle excise tax applicable.
The standard tax rate is 4% of the vehicle’s purchase price, after deducting any trade-in credit. However, for sales between private individuals (non-dealers), a different valuation method may apply. If the declared purchase price is less than 80% of the N.A.D.A. (National Automobile Dealers Association) average trade-in or wholesale value, the tax will be calculated based on the N.A.D.A. value instead of the lower purchase price. This ensures fair tax collection even in private vehicle transactions.
It’s important to note that legitimate vehicle transfers as gifts are exempt from the motor vehicle excise tax. In such cases, no sale is considered to have taken place. To claim this exemption, the new vehicle owner must submit a notarized Affidavit of Gift of Motor Vehicle or Boat (form MVD-10018). This affidavit requires both the giver and receiver to swear under oath, under penalty of perjury, that the vehicle transfer was indeed a gift.
Payment of the Motor Vehicle Excise Tax is required when the buyer applies for a vehicle certificate of title. If you purchase a vehicle from a dealership, they may handle the title application process and collect the MVET on your behalf. Otherwise, when applying for a title independently, you must pay the tax directly to the New Mexico Motor Vehicle Division (MVD) or one of its authorized agents.
New Mexico enforces a penalty for late vehicle titling. Residents who acquire a vehicle in New Mexico and fail to apply for a title within 90 days of the transfer date, or those who acquire a vehicle out-of-state and fail to apply within 90 days of bringing the vehicle into New Mexico, will face a tax penalty. This penalty is substantial: 50% of the original Motor Vehicle Excise Tax amount.
This 50% penalty effectively increases the total tax rate to 6% (calculated as 4% multiplied by 1.5).
The revenue generated from the Motor Vehicle Excise Tax is allocated to specific funds. Twenty-five percent of the collected tax is directed to the Local Governments Road Fund, supporting local road maintenance and infrastructure projects. The remaining seventy-five percent is allocated to the Highway Infrastructure Fund, contributing to broader highway and infrastructure development across New Mexico.
Finally, if you have acquired a vehicle from another state and paid a gross receipts tax, sales tax, compensating tax, or similar tax in that state, you may be eligible for a credit. The amount of tax already paid in another state can be credited against the Motor Vehicle Excise Tax due in New Mexico for the same vehicle, potentially reducing your tax liability.
For further information or assistance, you can contact the Department or visit the New Mexico Motor Vehicle Division website for detailed guidelines and procedures on vehicle titling and registration.
