To encourage companies to supply our growing markets, New Mexico has adopted among the country’s most aggressive incentives. A partial list includes:
General Tax Credits
Industry-Specific Tax Credits and Deductions
GENERAL TAX CREDITS
High-Wage Jobs Tax Credit
Companies may take a credit equal to ten percent of the combined value of salaries and benefits for each new job paying a minimum of $28,000 per year in areas with populations less than 40,000 persons; companies located in larger areas must pay salaries of $40,000 to receive the credit. Qualified employers may take the credit for up to four years and any excess credit will be refunded to the business. The credit shall not exceed $12,000 per year, per job. The credit is applied against the businesses tax liability, including the state portion of gross receipts tax, compensating tax and withholding tax.
Manufacturer’s Investment Tax Credit
Manufacturers may take a tax credit of five percent of the value of qualified equipment and other property used in their operation. The credit can be applied against compensating, gross receipts or withholding tax up to 85% of the total. Any remaining available credit may be claimed in subsequent reporting periods. In addition, the company must add one new job for each credit up to $30 million; and one new employee must be hired for each $500,000 in equipment.
New Markets Tax Credit
The Statewide Economic Development Finance Act grants the New Mexico Finance Authority (“NMFA”) with broad authority to operate financing programs that stimulate economic development including the power to form, operate, own or co-own qualified Community Development Entities (“CDEs”) for the purpose of participating in the New Markets Tax Credit (“NMTC”) Program.
In 2006, the NMFA formed Finance New Mexico, LLC (“Finance New Mexico”), a qualified CDE, and in 2007, Finance New Mexico was awarded an allocation of $110 million in New Markets Tax Credits authority which will enable Finance New Mexico to generate approximately $35 million in capital that it will lend directly to qualified businesses in low-income areas.
The NMFA will operate the NMTC program on behalf of Finance New Mexico under the guidance of its adopted New Markets Tax Credit Program Policies and Procedures, Economic Impact Policies and Lending and Credit Policies. The NMTC program was established primarily to provide greater access to financing for new, expanding or relocating businesses in underserved areas across the country. NMFA is targeting the use of its allocation of tax credit incentives to add to existing statewide economic development initiatives.
Rural Jobs Tax Credit
Eligible employers must be located in a rural area and be approved for the JTIP program. Employers receive a credit of 6.25% of the first $16,000 in wages. If the job is located in a Tier 1 community (< 15,000 in population), the employer may take the credit for four consecutive years. Businesses located in a Tier 2 community (> 15,000 in population) may take the credit for two consecutive years. If the amount of credit exceeds the businesses tax liability, the excess may be carried forward for up to three years. Rural New Mexico is defined as any part of the state other than Los Alamos, Albuquerque, Rio Rancho, Las Cruces and Santa Fe – and a 10 mile zone around municipalities.
Technology Jobs Tax Credit
Businesses may take a credit on research expenditures of 4% (8% in rural areas). Qualified expenditures may include land, buildings, equipment, computer software and upgrades, consultants, technical literature, test materials, patents, payroll, and labor. The credit may be taken against gross receipts tax, compensating tax or state payroll tax, and may be carried forward. An additional 4% may be applied against state income tax if base payroll expenses will be increased by at least $75,000 per $1,000,000 of expenditures claimed.
Angel Investment Tax Credit
A taxpayer who files a New Mexico income tax return and who is a “qualified investor” may take a tax credit of up to $25,000 (25% of a qualified investment of not more than $100,000). For instructions on applying, click here.
Angel Investment Tax Credit Investment Form
To be completed by the investor, eligible for the angel investment tax credit.
Angel Investment Tax Credit Application Form
To be completed by the small business who is recipient of the qualified cash investment in equity eligible for the angel investment tax credit.
Angel Investment Tax Credit Application Form – Investing Entity other than Accredited Investor.