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 (11)
• Utility / Private Incentives (4)
• Laws and Regulations (14)

State Incentives

New Mexico's National Electric Vehicle Infrastructure (NEVI) Planning

The U.S. Department of Transportation’s (DOT) NEVI Formula Program requires the New Mexico Department of Transportation (NMDOT) to submit an annual EV Infrastructure Deployment Plan (Plan) to the DOT and U.S. Department of Energy (DOE) Joint Office of Energy and Transportation (Joint Office), describing how the state intends to distribute NEVI funds. The submitted plans must be established according to NEVI guidance.

For more information about New Mexico’s NEVI planning process, see the NMDOT NEVI website. To review New Mexico’s NEVI plan, see the Joint Office State Plans for EV Charging website.

Diesel Emission Reduction Funding

The New Mexico Environment Department (NMED) provides U.S. Environmental Protection Agency Diesel Emission Reduction Act (DERA) funding for heavy-duty on-road new diesel or alternative fuel repowers and replacements, as well as off-road all-electric repowers and replacements, with priority to hydrogen fuel cell projects. Vehicles that qualify for replacement or repower include:

• School buses;
• Class 5 transit buses;
• Class 5-8 heavy-duty vehicles; and,
• Non-road engines, equipment, or vehicles used in construction, cargo handling, agriculture, mining, or energy production.

For more information, see the NMED DERA website.

Electric Vehicle (EV) Charging Station Make-Ready Building Renovation Tax Credit

The Sustainable Building Tax Credit (SBTC) provides a renovation tax credit for the purchase and installation of EV make-ready infrastructure at existing buildings. Residential properties are eligible for a $500 tax credit, increasing to $1,000 if the infrastructure is for an income-eligible resident. Commercial properties are eligible for a tax credit of 50% of the cost, up to $1,500, increasing to 100% of the cost, up to $3,000, if the infrastructure is for affordable housing. To be eligible, commercial buildings may not be larger than 20,000 square feet and must install wiring capable of supporting Level 2 EV charging stations at 10% of parking spaces. This tax credit is available for renovations completed between January 1, 2022, and December 31, 2027. Annual funding limits apply, and funding is available on a first-come, first-served basis.

For more information and additional eligibility requirements, see the SBTC website.

(Reference New Mexico Statutes 7-2-18.32)

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, see the New Mexico Economic Development Department Industry-Specific Tax Incentives website.

(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 provides credit against combined reporting taxes (gross receipts, compensating, and withholding) for qualified manufacturers of alternative energy products, including 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 New Mexico’s Industry-Specific Tax Incentives website.

(Reference New Mexico Statutes 7-9J-1 through 7-9J-8)

Alternative Fuel Tax Exemption

Alternative fuel distributed by or used for federal 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 and Natural Gas Vehicle (NGV) 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 (lbs.) to compensate for the additional weight of the idle reduction technology. A vehicle primarily powered by natural gas may exceed the state’s gross vehicle weight limits by a weight equal to the difference between the average weight of the vehicle with the natural gas tank and fueling system and the average weight of a comparable vehicle with a diesel tank and fueling system. The NGV maximum gross weight may not exceed 82,000 lbs.

(Reference New Mexico Statutes 66-7-410)

Biomass Tax Credit

Dairy or feedlot owners may receive a tax credit of up to $5 per wet ton of agricultural biomass that is used to generate electricity or to make liquid or gaseous fuel for commercial use.

(Reference New Mexico Statutes 7-2-18.26)

Utility / Private Incentives

El Paso Electric - New Mexico

El Paso Electric is an investor-owned utility (IOU) that operates in New Mexico. This page provides a summary of the types of incentives provided by the utility related to alternative fuels and vehicles. For more information on these incentives, see the El Paso Electric website.

Residential Incentives

Non-Residential Incentives

El Paso Electric Co - New Mexico

El Paso Electric Co is an investor-owned utility (IOU) that operates in multiple states. This page provides a summary of the types of incentives provided by the utility related to alternative fuels and vehicles. For more information on these incentives, see the El Paso Electric Co website.

Residential Incentives

Non-Residential Incentives

Powering New Mexico - New Mexico

Powering New Mexico is an investor-owned utility (IOU) that operates in New Mexico. This page provides a summary of the types of incentives provided by the utility related to alternative fuels and vehicles. For more information on these incentives, see the Powering New Mexico website.

Residential Incentives

Non-Residential Incentives

Xcel Energy - New Mexico

Xcel Energy is an investor-owned utility (IOU) that operates in multiple states. This page provides a summary of the types of incentives provided by the utility related to alternative fuels and vehicles. For more information on these incentives, see the Xcel Energy website.

Residential Incentives

Non-Residential Incentives

Laws and Regulations

Public Utility Definition

An entity that is not a regulated utility that resells natural gas or electricity as motor fuel is not defined as a public utility.

(Reference New Mexico Statutes 62-3-4)

Utility Electric Vehicle (EV) Support

By January 1, 2021, and upon request by the New Mexico Public Regulation Commission (Commission) thereafter, public utilities must file an application to the Commission to expand transportation electrification. Applications may include, but are not limited to, incentives to facilitate the installation of EV charging infrastructure, electrification of public fleet vehicles, EV charging rates, and customer outreach and education programs. The Commission may approve applications based on whether the proposed projects can be reasonably expected to improve the electrical system efficiency of the public utility, to increase access to electricity as a transportation fuel, including in low income and underserved communities, to reduce air pollution and greenhouse gas emissions, and to encourage consumer adoption of EVs.

(Reference New Mexico Statutes 62-8-12)

State Emissions Reduction Strategy

The governor established the Climate Change Task Force (Task Force) to evaluate strategies to reduce GHG and criteria pollutant emissions in New Mexico, including potential low emission vehicle and ZEV standards. New Mexico will pursue GHG emissions reduction of at least 45% below 2005 levels by 2030. The Task Force developed a climate strategy with initial recommendations in 2019 and published a progress report in 2021. For more information, see the Task Force website.

(Reference Executive Order 2019-003, 2019)

Regional Electric Vehicle (REV) West Plan

New Mexico joined Arizona, Colorado, Idaho, Montana, Nevada, Utah, and Wyoming (Signatory States) in signing the REV West memorandum of understanding (MOU) to create an Intermountain West Electric Vehicle (EV) Corridor that will make it possible to seamlessly drive an EV across the Signatory States’ major transportation corridors.

In 2019, the Signatory States signed a revised REV West MOU to update their EV corridor goals based on progress to date. Signatory States are committed to:

• Educate consumers and fleet owners to raise EV awareness, reduce range anxiety, and increase EV adoption;
• Coordinate on EV charging station locations to achieve a consistent user experience across Signatory States;
• Use and promote the REV West Voluntary Minimum Standards for EV charging stations and explore opportunities for implementing the standards in Signatory States;
• Identify and develop opportunities to incorporate EV charging stations into planning and development processes such as building codes, metering policies, and renewable energy generation projects;
• Encourage EV manufacturers to stock and market a wide variety of EVs within the Signatory States;
• Identify, respond to, and collaborate on funding opportunities to support the development of the plan; and
• Support the build-out of direct current fast charging (DCFC) stations along EV corridors through investments, partnerships, and other mechanisms.

The Signatory States maintain a Coordination Group composed of senior leadership from each state which meet on a quarterly basis and report on the above actions. For more information, see the REV West website.

Energy and Fuel Cost Savings Contracts

Government fleets may finance alternative fuel vehicles or related infrastructure through guaranteed utility savings contracts where vehicle operational and fuel cost savings pay for the capital investment. Guaranteed utility savings contracts must show that the cost savings resulting from the alternative fuel and infrastructure projects are equal to or higher than the annual contract payments.

(Reference New Mexico Statutes 6-23-2 and 6-23-3)

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). All diesel fuel sold to consumers for use in on-road motor vehicles is mandated to contain at least B5. The biodiesel blend mandate is currently suspended.

(Reference New Mexico Statutes 57-19-28 and 57-19-29)

State Agency Low- and Zero-Emission Vehicle Acquisition Requirements

When acquiring new vehicles, all state agencies must purchase all-electric vehicles (EVs), plug-in hybrid electric vehicles (PHEVs), or fuel cell electric vehicles (FCEVs) when one or more models are available for purchase. By 2035, 100% of vehicles in the state fleet must be EVs, PHEVs, or FCEVs. The New Mexico General Services Department and New Mexico Department of Transportation must create fleet purchasing requirements that support these acquisition requirements. State agencies must propose annual vehicle and charging station acquisition and deployment targets to meet the 2035 fleet transition goal.

(Reference Executive Order 2023-138, 2023)

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

A minimum of 75% of state government and educational institution fleet light-duty 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.

(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, 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 pure biodiesel (B100) standards.

(Reference New Mexico Statutes 13-1B-2 and 57-19-27)

Low Carbon Fuel Standard

The New Mexico Environment Improvement Board must implement rules to establish a Clean Transportation Fuel Standard Program (Program) that reduces the overall carbon intensity of transportation fuels used in the state by at least 20% below 2018 carbon intensity levels by 2030 and at 30% below 2018 carbon intensity levels by 2040. The Program must go into effect no later than July 1, 2026. For more information, see the New Mexico Environment Department Clean Fuel Standard website.

(Reference House Bill 41, 2024)

Alternative Fuels Tax

Alternative fuels subject to the New Mexico excise tax include 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, see the New Mexico Taxation and Revenue Department website.

(Reference New Mexico Statutes 7-16B-1 through 7-16B-10)

Medium- and Heavy-Duty Zero Emission Vehicle (ZEV) Requirement

New Mexico has adopted the California Advanced Clean Trucks requirements specified in Title 13 of the California Code of Regulations requiring manufacturers to meet California’s ZEV production and sales requirements. Beginning with model year 2027, manufacturers will be required to sell zero-emission trucks as an increasing percentage of their annual sales for Class 2b through Class 8 vehicles in New Mexico. ZEVs include all-electric and fuel cell electric vehicles. For more information, see the New Mexico Environment Department Transportation website.

(Reference New Mexico Environment Department Docketed Matters, EIB 23-56 (R) and New Mexico Administrative Code 20.2.91)

Zero Emission Vehicle (ZEV) Sales Requirements and Low Emission Vehicle (LEV) Standards

New Mexico has adopted the California motor vehicles emissions standards and compliance requirements in the Title 13 of the California Code of Regulations. Manufacturers must meet the greenhouse gas emissions standard and the ZEV production and sales requirements, beginning with model year (MY) 2026. These regulations apply to new passenger cars, light-duty trucks, and sport utility vehicles.

In November 2023, New Mexico adopted the California vehicle emissions standards and compliance requirements set forth in the California Air Resources Board Advanced Clean Cars II regulation. These new emissions standards and requirements will begin with MY 2027 and require that 82% of new passenger vehicles sold in New Mexico must be ZEVs by 2032.

For more information, see the New Mexico Environment Department Transportation website.

(Reference New Mexico Environment Department Docketed Matters, EIB 21-66 (R) and New Mexico Administrative Code 20.2.91)