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Biomass Equipment & Materials Compensating Tax Deduction

Eligibility 
Commercial
Industrial
Savings Category 
Biomass
Hydrogen
Municipal Solid Waste
Combined Heat & Power
Landfill Gas
Anaerobic Digestion
Microturbines
Program Info
Sector Name 
State
Administrator 
New Mexico Taxation & Revenue Department
State 
New Mexico
Program Type 
Sales Tax Incentive
Rebate Amount 

100% of value may be deducted for purposes of calculating Compensating Tax due

Summary 

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.