State Business Incentives
The Clovis area and the State of New Mexico provide aggressive incentives to reduce the overall cost of business. Some of the most significant incentive programs include:
- Double Weighted Sales Option
- Technology Jos Tax Credit
- Manufacturing Investment Tax Credit
- Gross Receipts Tax Exemptions (IRB's)
- Property Tax Abatements (IRB's)
- High Wage Jobs Tax Credit
- Job Training Incentive Program
- Interstate WATS Tax Exemption
- Out-of-State Tuition Waiver/Lottery Scholarships
Double Weighted Sales
Companies can elect to double weight the sales, in which a corporation takes the New Mexico portion of plant, payroll, sales and sales (counting the sales twice) and uses a divisor of four.
Technology Jobs Tax Credit
Qualified New Mexico facilities may take a credit equal to 4% (8% in rural areas) of expenditures related to qualified research for land, buildings, equipment, computer software and upgrades, consultants, technical books and manuals, test materials, costs associated with 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% (8% total urban, 16% total rural) may be applied against state income tax if base payroll expenses increase by at least \$75,000 per \$1,000,000 of expenditures claimed. The credit may be carried forward.
Assume a company plans to spend \$10,000,000 in qualified expenditures:
|Technology Jobs Tax Credit||Calculation||Value|
|If payroll is less than \$750,000, tax credit is 4%||\$10,000,000 x 0.04||400,000|
|If payroll is over \$750,000, tax credit is 8%||\$10,000,000 x 0.08||800,000|
*Expenditures may include land, buildings, equipment, computer software and upgrades, consultants, technical books and manuals, test materials, costs associated with patents, payroll, and labor.
Manufacturing Investment Tax Credit
New Mexico tax law provides for a credit equal to five percent of the value of qualified equipment and other property used directly and exclusively in a manufacturing operation. The credit can be applied against compensating or gross receipts tax or withholding tax due. Gross receipts tax acts very much like a sales tax; the city rate is 6.0625 percent. Compensating, or use, tax applies to purchases made out of state and totals 5.0 percent.
The credit is limited to 85% of the sum of the taxpayer's gross receipts tax, compensating tax, and withholding tax due for the reporting period. Any remaining available credit may be claimed in subsequent operating periods.
Must meet criteria for new jobs added:
- For Claims \$0 - \$30,000,000: 1 new worker employed for each \$500,000 in qualified equipment
- For Claims Over \$30,000,000: 1 new worker employed for each \$1 million in qualified equipment
Credit is available through 6/30/2011.
High Wage Job Tax Credit
The High Wage Jobs Tax Credit provides businesses with a tax credit equal to ten percent of the combined value of salaries and benefits for each net new job paying a salary of at east \$40,000 per year in the Albuquerque metropolitan area and other communities larger than 40,000 in population. The value of the credit cannot exceed \$12,000 per job. Qualified employers can take the credit for four years. The credit can be applied against the modified combined tax liability of a taxpayer, including the state portion of gross receipts tax, compensating tax and withholding tax. Any excess credit will be refunded to the taxpayer.
Eligible jobs are those created by qualifed employers after July 1, 2004 and prior to July 1, 2009.
In New Mexico, companies located in communities smaller than 40,000 persons, are eligible for a tax credit equal to ten percent of the wages and benefits paid for each new job created paying at least \$28,000 annually.
Job Training Incentive Program
The New Mexico Job Training Incentive Program is a highly flexible state program to provide pre-employment (classroom) and on-the-job training. Customized training may be provided by post-secondary educational institutions, company trainers, or outside trainers.
The state will reimburse
- Up to 50% of trainees' wages up to 1,040 hours in urban areas
- 100% of classroom training costs provided by New Mexico post-secondary education institutions (e.g. Albuquerque Technical Vocational Institute)
- 50% of trainees' travel and per diem for out-of-state training
- 50% of company or outside trainers' travel and per diem when using out-of-state trainers
- Maximum wage reimbursement is tied to hours required to learn the job and the hourly wage
- Applicants must be New Mexico residents for one year
- Trainees must be guaranteed full-time year-round employment upon successful completion of training
- "Hands-on" or production jobs qualify; supervisory, salaried or professional jobs do not
- Re-training does not qualify for assistance
- Companies can apply for subsequent assistance if they have maintained hiring levels that exceed the peak employment as established by the initial application
- Reimbursement is subject to availability of funds and approval by the Industrial Development Board
Assume a company hires three types of workers at different wage rates and different training time schedules.
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the JTIP Brochure
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the JTIP Policy and Procedures Manual
The Legislative Lottery Scholarship helps provide tuition for New Mexico high school graduates who want to attend a New Mexico Public College or University.
The scholarship pays 100% of tuition for eight consecutive semesters of eligibility beginning with the second semester of college enrollment. As of Fall 2007, the minimum requirements are:
- Be a New Mexico resident;
- Graduate from a New Mexico public high school, an accredited private high school recognized by the Public Education Department, or have obtained a New Mexico GED;
- Enroll full-time at an eligible New Mexico public college or university in the first regular semester immediately following high school graduation or obtaining a GED; and
- Obtain and maintain at least a 2.5 GPA.
Clear skies, mild weather, world-renowned research, a growing pool of investors, and an expanding aerospace industry make New Mexico an ideal location for the next generation of aerospace entrepreneurs.
Aircraft Maintenance or Remodeling Tax Deduction
Receipts from maintaining, refurbishing, remodeling or otherwise modifying a commercial or military carrier (aircraft) over 10,000 pounds gross landing weight may be deducted from gross receipts.
Aircraft Manufacturing Tax Deduction
Receipts of an aircraft manufacturer or affiliate from selling aircraft or aircraft parts, or from selling services performed on aircraft or aircraft components or from selling aircraft flight support, pilot training or maintenance training services may be deducted from gross receipts.
Research and Development Tax Deduction
Aerospace services are the research and development services sold or for resale to an organization for resale by the organization to the U.S. Air Force. When R&D services are sold to another corporation for resale to the Air Force, the seller’s receipts are deductible. If the R&D services are sold to an intermediary for resale to a corporation for resale to the Air Force, those receipts are also deductible.
Space Gross Receipts Tax Deductions
There are four separate deductions connected with the operation of a spaceport in New Mexico. Businesses may deduct the receipts from launching, operating or recovering space vehicles or payloads; from preparing a payload in New Mexico; from operating a spaceport in New Mexico; and from the provision of research, development, testing and evaluation services for the United States Air Force operationally responsive space program.
Agricultural Business Tax Deductions and Exemptions
Gross receipts tax deductions are available for:
- Feed for livestock, including the baling wire or twine used to contain the feed, fish raised for human consumption, poultry or animals raised for hides or pelts and seeds, roots, bulbs, plants, soil conditioners, fertilizers, insecticides, germicides, insects, fungicides, weedicides and water for irrigation and
- Warehousing, threshing, cleaning, harvesting, growing, cultivating or processing agricultural products including ginning cotton, and testing and transporting milk. Gross receipts tax exemptions are permitted for feeding, pasturing, penning, handling or training livestock and, for agribusinesses, selling livestock, live poultry and unprocessed agricultural products, hides and pelts.
Clean & Renewable Energy
Advanced Energy Tax Credits
Advanced energy facilities, such as solar thermal electric generating, advanced technology coal generating or recycled energy, may qualify for up to \$60 million in credits. The credit is equal to 6 percent of facility development and construction expenditures.
Alternative Energy Product Manufacturers Tax Credit
Manufacturers of electric or hybrid vehicles, fuel cell systems, renewable energy systems, IGCC systems, and carbon sequestration equipment may receive for a tax credit of up to 5 percent of the their capital expenses. The credit may be applied against gross receipts, compensating, or withholding tax and may be carried forward for up to 5 years.
Biodiesel Blending Facility Tax Credit
A business which installs biodiesel blending equipment owned by the rack operator for the purpose of establishing or expanding a facility to produce blended biodiesel fuel is eligible to claim a credit against gross receipts tax and compensating tax.. The credit is equal to 30% of the purchase cost of the equipment and the cost of installing that equipment. The credit cannot exceed \$50,000 with respect to equipment installed at any one facility nor can the claims exceed \$1,000,000 per calendar year.
Blended Biodiesel Fuel Tax Credit
Provides a tax credit on blended biodiesel fuels (minimum of 2 percent biodiesel). Gross receipts and compensating tax may be deducted for installing biodiesel blending infrastructure up to \$50,000 per facility or \$1 million per year.
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Hybrid Vehicle Tax Exemption
Purchasers of hybrid gasoline-electric vehicles with an EPA fuel economy rating of 27.5 miles per gallon or better can save between \$600 and \$1,000 in-state tax savings in addition to the federal tax deduction.
Renewable Energy Production Tax Credit
Each renewable energy generator of one megawatt or more may earn an income tax credit (personal or corporate) of 2.7 cents (on average) per kilowatt-hour for the first four hundred thousand megawatt-hours (=400,000,000 kilowatts) of electricity produced for ten consecutive years, beginning with the first year of production. New Mexico’s is fully refundable.
Solar Energy Systems Gross Receipts Tax Exemption
Power produced from solar electric and solar thermal energy systems is exempt from gross receipts tax when the generated power is used on-site.
Solar Market Development Income Tax Credit
Augments the federal solar tax credit by reimbursing up to 30 percent of the cost of a solar photovoltaic or solar thermal system. Solar system owners can receive up to \$2,000 federal solar tax credits and up to \$9,000 in state solar tax credits.
Sustainable Building Tax Credit
This credit provides income tax credits for building energy-efficient, sustainable commercial, institutional and residential buildings. Homes must be 40 percent more energy efficient than the standard building code. Commercial and institutional buildings must be 50 percent more energy efficient
Telemarketing Gross Receipts Tax Exemption
Receipts from WATS (Wide Area Telephone Service) and private communications services are exempted from gross receipts tax and interstate telecommunications gross receipts tax act.