Oil and Gas Production Taxes
There are five taxes that are imposed based on the taxable value of oil, natural gas, liquid hydrocarbons, carbon dioxide, helium and other non-hydrocarbon gases (“products”) severed in New Mexico. In addition, the oil and gas conservation tax applies to uranium, coal and geothermal energy. In general, the taxable value of products is the actual price of the product at the production unit less royalties paid the United States, the State of New Mexico or an Indian tribe or pueblo, and less the reasonable expense of trucking the product from the production unit to the first place of market.
Oil and Gas Severance Tax - The tax rate is a percentage of the taxable value of the products as determined by Section 7-29-4.1 NMSA 1978.
Oil and Gas Conservation Tax - The tax rate is a percentage of the taxable value of products as determined by Section 7-30-4.1 NMSA 1978.
Oil and Gas Emergency School Tax - This is a privilege tax on the business of every person severing oil and other liquid hydrocarbons, carbon dioxide, helium and natural gas in New Mexico. The rate is based on the products’ taxable value as determined under Section 7-31-4.1 NMSA 1978.
Oil and Gas Ad Valorem Production Tax - This is an ad valorem tax on the assessed value of products severed and sold from each production unit. The assessed value is determined by applying the uniform assessment ratio to the taxable value of products. The tax is governed by Section 7-32-1 et seq. NMSA 1978.
Returns and payments of the above taxes are due on or before the 25th day of the second month following the month of production.
Oil and Gas Production Equipment Ad Valorem Tax – This is an ad valorem tax on equipment used in production of oil, natural gas, carbon dioxide and non-hydrocarbon gas. The tax is on the assessed value of the equipment. The assessed value of the equipment is a percentage of its value as established under the Ad Valorem Production Tax multiplied by the uniform assessment ratio.
This tax is due on or before November 30 each year.
New Mexico Taxation and Revenue Department
P.O. Box 2308
Santa Fe, NM 87504-2308
For assistance, call (505) 827-0806
E-File Oil and Gas Production Taxes at the ONGARD Service Center Web Site.
Who Must Register?
Statutory References: Look for Sections 7-29, 7-30, 7-31, 7-32 NMSA 1978 in the New Mexico State Statutes.