New Mexico lawmakers weigh fuel tax increases

What the proposal would change

The Revenue Stabilization and Tax Policy Committee heard a proposal to increase New Mexico’s gasoline excise tax by 3 cents per gallon, bringing the rate from 17 cents to 20 cents. The state’s special fuel excise tax, which covers diesel, would rise by 4 cents, from 21 cents to 25 cents per gallon.

The increases are projected to generate about annually. About would go to road funds for cities and counties across New Mexico.

Sen. Bobby Gonzales said the added revenue would help the state keep pace with rising road repair costs. He estimated that a driver buying 12 gallons of gasoline each week would pay an additional 36 cents weekly, or less than over a year. Gonzales said the proposal would cover about one-fifth of the transportation funding gap facing the New Mexico Department of Transportation in future years.

Road costs and household impact

NMDOT told lawmakers that road construction costs are projected to increase 136% by 2050. The department’s current projects have a combined value of billion.

Sen. Carrie Hamblen questioned the timing of the proposal, noting that drivers are already confronting higher fuel prices tied to the war in Iran. She said lawmakers considering the measure would need to address what residents are paying when they fill their tanks.

What happens next

The legislative session begins in January. If lawmakers approve the proposal, the higher gasoline and special fuel tax rates would take effect in July 2027.

Lawmakers also discussed changing how revenue from the Motor Vehicle Excise Tax is distributed. That change would not raise the tax but would direct a larger share of its existing revenue to New Mexico roads.