Buying a used car can save you some cash, but don’t forget about vehicle sales tax. New Mexico charges 4% sales tax on vehicle purchases.
New Mexico calls their sales tax “Motor Vehicles Excise Tax” (MVET), but it’s really the same thing: a 4% tax on the purchase price or NADA value of a car.
Keep reading to get the full scoop on New Mexico sales tax liabilities for your used car purchase.
Do you Pay Taxes When you Purchase a Vehicle From a Private Party in New Mexico?
When you buy a car in New Mexico, you’ll pay 4% of the vehicle’s purchase price, whether you buy from a private seller or a car dealer. New Mexico's tax law does not discriminate between the two.
Unless you qualify for a tax exemption (covered below), you’ll owe tax on your vehicle purchase.
When is MVET Due?
According to the New Mexico Motor Vehicles Department (MVD), the motor vehicle excise tax is due when a vehicle is titled. That’s because MVD assumes that a sale has taken place. It’s a fair assumption: people don’t normally transfer a car title unless there’s been a change of ownership.
If the vehicle was a gift, you can get out of paying the MVET by completing form MVD-10018.
New Mexico License Plates, Title And Registration Fees
In addition to the state sales tax, you may owe other fees when buying a car and registering it in New Mexico, such as a car title fee and registration fee.
To register your vehicle at the New Mexico Motor Vehicle Department (MVD) branch office, you must show proof of valid vehicle insurance. The first time you register a passenger vehicle, you will need to do the title transfer, which will cost you $28.
According to the New Mexico MVD, “The registration fee for passenger vehicles is based on the weight and model year of the vehicle. Registration fees range from $27.00 to $62.00 for a one year registration or $54.00 to $124.00 for a two year registration.”
The New Mexico standard license plate fee is included in the registration fee. A personalized plate costs from $17 to $37 in addition to the registration fee.
For the full scoop on New Mexico license plate and vehicle registration costs, see the New Mexico MVD page.
How is Used Car Sales Tax Calculated in New Mexico ?
Motor vehicle excise tax is a percentage of a car's purchase price owed to the state of New Mexico when you buy a car and register it in New Mexico.
For those who might be inclined to declare a low purchase price to lower their tax liability, bad news. If the state finds that “the declared purchase price of the vehicle is lower than 80% of the N.A.D.A. average trade-in or wholesale value,” they will calculate sales tax based on the NADA value.
It is important to note that underreporting the purchase price of a vehicle in order to avoid paying sales tax is illegal.
How to Pay New Mexico Vehicle Sales Tax
After buying a car from a private seller, you will pay the sales tax. Here is how to do it:
- To transfer ownership of the vehicle, you and the seller must complete the necessary paperwork, including the bill of sale (when you buy a used car on PrivateAuto, we provide an official New Mexico bill of sale and prompt both of you to sign it in our app at the appropriate stage of the transaction process). You'll need the following documents to transfer car ownership in a private transaction:
- The original car title.
- Proof of valid car insurance.
- Valid driver’s licenses, ID or passport.
- Calculate the amount of sales tax due. Multiply the vehicle's purchasing price by 4%.
- Fill out the sales tax form.
- Submit payment for all taxes and fees.
- Get payment proof from the New Mexico Taxation and Revenue Department.
- Get your registration, title, and new license plates. Once you've paid the sales tax and turned in the necessary documentation, you'll get your new registration and title for the car. The title and registration will show that you bought the car and that the sales tax has been paid. You will get your new license plates in the mail.
How to Avoid Paying New Mexico Vehicle Sales Tax?
Motor vehicle tax is something you can't avoid—it's a part of our lives. You are required by law to pay sales tax on private used car purchases in New Mexico or any other state that charges sales tax—unless you meet a sales tax exemption.
Sales Tax Exemptions in New Mexico
Here are some potential MVET exemptions; contact your local MVD branch for more concrete information.
Is Buying a Car from a Dealership Better?
Some New Mexico residents mistakenly believe that buying a car from a dealer saves money. The opposite is true: going to a New Mexico dealer costs you more money, and it's a pain—unless spending 3 hours in a New Mexico dealership is your idea of a good time.
- Dealerships charge documentation fees above and beyond all the other New Mexico taxes and fees you have to pay (the other taxes and fees are exactly the same whether you buy from a dealer or a private seller, by the way). The average documentation fee in New Mexico is $349.
- Used car dealerships typically charge higher prices. Their business model is based on buying low and selling high to generate the spread that keeps them in business. To get the best deals, skip the middleman and go directly to private sellers.
We do admit that dealers bring a certain amount of convenience that you don’t traditionally get when you buy from a private seller. In fact, that’s why we exist. PrivateAuto gives you dealer-like convenience in the palm of your hand while allowing you to transact peer-to-peer with regular folks like yourself.
By shopping for used cars from a private seller on PrivateAuto, you avoid the doc fee and get lower prices.
New Mexico Sales Tax Calculator
If you're in the market for a used vehicle, you'll want to calculate the applicable sales tax. With PrivateAuto's used car sales tax calculator, calculating sales tax has never been easier. This free online car sales tax calculator calculates the amount of tax you must pay on a used car purchase based on your tax rate (4%) and the vehicle's price.
Our innovative platform connects buyers and sellers and gives them all the tools to complete the deal, from in-app financing to secure messaging to integrated payments via our banking gateway, PrivateAuto Pay. You can also schedule a test drive and negotiate the price without ever disclosing your personal information.
Here are 10 easy steps to selling your vehicle in New Mexico:
- Gather the required paperwork for selling a car in New Mexico
- Register on PrivateAuto and get verified
- List your car
- Set your terms
- Vet incoming offers
- Choose a buyer
- Schedule a meeting
- E-sign documents
- Get paid, instantly
- Transfer title
New Mexico Tax FAQ
Which states have the lowest car sales tax rate?
The states with the lowest vehicle tax rate are Alaska, Delaware, Montana, New Hampshire, and Oregon, with a tax rate of zero. Nevada has no taxes on private-party car sales, though it does have them for dealership purchases.
If you want to avoid paying sales tax on car purchases, consider moving to one of these states.
With the exception of the above states, all US states charge sales tax on private-party vehicle purchases. There are some states, such as Oklahoma, North Carolina, Colorado, and Alabama, that charge 4.5% or less.
What is tax free in New Mexico?
Here's a list of some things that are tax free in New Mexico:
- Clothing and shoes under $100
- Necessary school supplies
- Computers under $1000
- Computer equipment under $500
What is the gross receipts tax?
New Mexico’s gross receipts tax (GRT) is another sort of sales tax levied against businesses operating in the state. According to the New Mexico Taxation and Revenue Department:
Gross receipts are the total amount of money or value of other consideration received from:
- Selling property in New Mexico.
- Leasing or licensing property employed in New Mexico.
- Granting a right to use a franchise employed in New Mexico.
- Performing services in New Mexico, and performing services outside of New Mexico, the product of which is initially used in New Mexico
- Selling research and development services performed outside New Mexico, the product of which is initially used in New Mexico.
In short, “gross receipts” are the sales a business makes, and the GRT is a tax on those sales.
How can I find a used car for sale near me?
PrivateAuto is the best place to find the used vehicle of your dreams.
Here is how you can find your dream car in just a few simple steps:
- Browse used vehicles for sale on PrivateAuto.
- Look at the top of the page for the "Filter by Location" button. There, you will enter your location.
- Set a search radius, such as 25, 50, or 100 miles.
- You can make your search even more specific by choosing more filters, such as make, model, year, price range, trim, and other criteria.
- When you click "Search," a list of all the vehicles that match your search criteria will appear.