In 2005, New Mexico adopted a policy to allow businesses to deduct the value of biomass equipment and biomass materials used for the processing of biopower, biofuels, or biobased products in determining the amount of Compensating Tax due.
New Mexico's Compensating Tax is an excise, or "use" tax, which is typically levied on the purchaser of the product or service for using tangible property in the state. The tax applies to imports of factory and office equipment, and other items. The rate is 5.125% on certain property used in New Mexico and 5% on certain services used in New Mexico. Compensating Tax is designed to protect New Mexico businesses from unfair competition from out-of-state business not subject to a sales or gross receipts tax. This biomass Compensating Tax deduction is analogous to a sales tax exemption for renewable energy equipment available in some other states.
Deductions from compensating tax do not have to be reported to the New Mexico Taxation and Revenue Department but records substantiating the deduction should be kept in the taxpayer's records.
| Name: | NM Stat. § 7-9-98 |
| Date Enacted: | 04/05/2005 |
| Effective Date: | 06/17/2005 |
| Name: | Information Specialist |
| Organization: | New Mexico Taxation & Revenue Department |
| Address: |
1100 South St. Francis Drive Santa Fe NM 87504 |
| Phone: | (505) 827-0700 |
This information is sourced from DSIRE; the most comprehensive source of information on incentives and policies that support renewables and energy efficiency in the United States. Established in 1995, DSIRE is operated by the N.C. Clean Energy Technology Center at N.C. State University.
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