Search Federal and State Laws and Incentives

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.

Up to $5 million is authorized for a revolving loan fund for AFV acquisitions by state agencies, political subdivisions, and educational institutions, effective July 1, 2018. Funds must be used for the purchase of vehicles that operate on natural gas, liquefied petroleum gas (propane), electricity, or hydrogen. The maximum amount of a loan per vehicle must not exceed the incremental cost of acquiring the vehicle or the following amounts:

Projected fuel cost savings from using the AFV is considered when the loan repayment schedule is developed.

(Reference House Bill 165, 2018 and New Mexico Statutes 13-1B-1 through 13-1B-7)

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 pure biodiesel (B100) standards. (Reference New Mexico Statutes 13-1B-2 and 57-19-27)

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)