There are Tax Credits offered to New Mexico businesses:
Angel Investment Tax Credit (NM Taxation & Revenue Dept.)
New Mexico offers a corporate income tax credit of up to $25,000 (25% of the first $100,000) for investment in a New Mexico company engaging in high-technology research or manufacturing.
- Investors may claim this tax credit for up to 2 different companies per year.
- Any remaining balance may be carried forward for 3 consecutive years.
Child Care Corporate Income Tax Credit (NM Taxation & Revenue Dept.)
New Mexico offers a corporate income tax credit of up to $30,000 (30% of the first $100,000 in eligible expenses) for either providing or paying for licensed child care services for employees’ children under 12 years of age.
- The tax credit is applied to the taxable year in which the expenses occur.
- Any remaining balance may be carried forward for three 3 consecutive years.
High Wage Jobs Tax Credit (NM Taxation & Revenue Dept.)
New Mexico offers a 10% corporate income tax credit for wages and benefits paid to employees that earn at least $28,000 annually. This tax credit is capped at $12,000 per year, per job. (After July 1, 2015, the qualifying salary and benefits level will increase to $40,000 annually.)
To qualify, New Mexico employers must have:
- sold more than 50% of their goods and services outside of New Mexico during the preceding 12 months,
- total employment is greater than the previous year, and
- the employer is certified by the NM Economic Development Department to participate in JTIP.
Qualifying employees must be:
- New Mexico residents,
- must not be a relative of the owner, and
- may not own more than 50% of the company.
The High Wage Jobs Tax Credit may be earned a maximum of 4 years per job, with 5 years to apply the tax credit. (The employer must apply for the credit within 12 months following the end of the calendar year in which the final qualifying period closes.) Any remaining balance after this time will be paid directly to the employer.
The High Wage Jobs Tax Credit program is extended until July 1, 2020.
Investment Tax Credit for Manufacturing Equipment (NM Taxation & Revenue Dept.)
New Mexico offers a 5.125% corporate income tax credit on the value of qualified manufacturing equipment.
Eligibility & Specifications:
- Equipment must be used in a manufacturing facility and depreciated for federal income taxes.
- Equipment must not have been previously used in New Mexico.
- If the equipment is acquired using industrial revenue bonds, the purchase is still eligible for this tax credit.
Any equipment that is neither essential to the manufacturing process or is not used in conjunction with the manufacturing process will not qualify for this tax credit, even if that equipment is physically located in the plant. This would include all motor vehicles, furniture, shelving, supplies, kitchen equipment, televisions, radios, etc.
To receive the credit, a business must hire one employee for every $500,000 worth of equipment purchased, up to $30 million. Beyond the $30 million threshold, a business must hire one employee for every $1 million worth of equipment. Tax payments may be reduced by 85% per tax period until the credit is exhausted. If the tax credit balance is lower than $500,000, there are provisions available for receiving cash payment.
This tax credit may be applied to state gross receipts, compensating, or withholding taxes. But, this tax credit does not apply to local gross receipts taxes.
Tax payments may be reduced by 85% per tax period until the credit is exhausted. If the tax credit balance is lower than $500,000, there are provisions available for receiving cash payment.
Job Mentorship Tax Credit (NM Taxation & Revenue Dept.)
New Mexico offers an annual corporate income tax credit of up to $12,000 for hiring youth who are participating in work-based learning or school-to-career programs that are designed to establish academic goals and career objectives for secondary school students.
The tax credit is based on 50% of gross wages paid to a maximum of 10 students for the first 320 hours of employment for each qualified student.
Qualified students are:
- between 14 and 21 years of age,
- attend an accredited New Mexico secondary school full-time, and
- are participants in a career preparation education program sanctioned by the secondary school.
- A student may not qualify for this tax credit for more than 3 taxable years.
The wages of no more than 10 students’ may be utilized for this tax credit during any taxable year. Employers must prove the students are not replacing any full-time employees.
Any remaining balance may be carried forward for 3 consecutive years.
New Markets Tax Credits (NM Finance Authority)
This program provides a 39% federal income tax credit for investments in businesses or economic development projects in qualified Census tracts. All of Portales qualifies for this program.
New Markets Tax Credits require an investment floor of $5 million and it’s capped at $20 million. Recovery of this tax credit occurs over a 7-year period. A 5% recovery is allowed in each of the first 3 years. The recovery rate is increased to 6% in each of the remaining 4 years.
If the investment is sold before the 7-year term is completed, all tax credits that have been taken will be recaptured with interest.
Benefits for the business may include:
- lower borrowing costs,
- higher loan-to-value ratios,
- lower debt coverage,
- extended interest-only periods,
- potential to convert a significant portion of debt at the end of the 7-year compliance period.
To qualify, businesses may not receive more than 80% of revenue from farms, golf courses, tanning salons, massage parlors, package liquor sales, or residential rentals.
Since New Markets Tax Credits are intended to stimulate economic growth in low-income areas, projects that demonstrate significant community impact have the best chance for selection. Important factors include:
- direct, permanent job creation,
- indirect job creation,
- construction job creation,
- blight removal,
- increased tax base,
- environmental remediation,
- attracting or retaining a skilled workforce,
- green-oriented and technology development projects,
- providing new goods and services to an underserved area.
R&D Small Business Tax Credit (NM Taxation & Revenue Dept.)
New Mexico offers research and development (R & D) small businesses a corporate income tax credit equal to annual gross receipts taxes or up to half of annual withholding taxes.
This tax credit can be applied to taxes due on state gross receipts, compensating, and withholding taxes and may be accrued for 3 years of operation.
To qualify, the business must:
- not employ more than 25 employees in a single month,
- have no more than $5 million in total revenue in any prior fiscal year,
- have made qualified research expenditures that account for at least 20% of total expenditures for the previous twelve (12) months,
- be engaged in research to discover information that is technological in nature and is intended to be useful in the development of a new or improved business component related to new and/or improved function, performance, reliability, or quality.
The research must not be for style, taste, cosmetic, or seasonal design factors.
In addition, if the qualified business is owned directly or indirectly by another business, in any prior calendar month there must not have been more than half of its voting securities, or other equity interest, with the right to replace the governing body of the qualified business.
Rural Jobs Tax Credit (NM Taxation & Revenue Dept.)
New Mexico offers a corporate income tax credit of up to $1,000 (6.25% of the first $16,000 in wages) for each job filled by a qualified employee for at least 48 weeks during a 12 month period. This tax credit is redeemed at $1,000 per year, per job.
To qualify, the company must be approved for Job Training Incentive Program (JTIP) funds, but specific jobs within a company do not have to meet JTIP requirements. Employers must be:
- a manufacturing or production company,
- a service company that derives at least 50% of its revenue or customer base from outside of New Mexico, or
- certain green industries.
The Rural Jobs Tax Credit can be applied to taxes due on state gross receipts, corporate income, and personal income tax. It may be carried forward for up to 3 years and may be sold, exchanged or transferred.
Sustainable Building Tax Credit (NM Energy, Minerals, & Natural Resources Dept.)
New Mexico offers a tax credit for utilizing certified sustainable building practices that can be applied to either personal or corporate income taxes. All projects must substantially reduce energy consumption for the new or renovated building.
This tax credit is based on a third-party assessment of the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) sustainable building rating that is achieved (silver, gold, or platinum) and the amount of space that has been constructed or renovated.
This tax credit is apportioned on a first-come, first-served basis. The amount of Sustainable Building tax credits that are available each year is capped at $1 million. As of May 23, 2014, $784,187.80 remains available for 2015 projects and all $1 million remains available for 2016.
Contact Harold Trujillo of the Energy Conservation and Management Division at (505) 476-3372 for current information and to apply for this tax credit.
Technology Jobs Tax Credit (NM Taxation & Revenue Dept.)
New Mexico offers a corporate income tax credit of 8% on qualified expenditures for conducting research and development. Qualified expenditures include land, buildings, payroll, rent, operating expenses, software, equipment, technical manuals, and consultants/contractors performing work in New Mexico.
An additional 8% tax credit is available if the business increases annual payroll by at least $75,000 for every $1 million in qualified expenditures it claims in a tax year.
To qualify, employers must operate a business that is technological in nature and involves a process of experimentation intended to produce a new and/or improved function, performance, or reliability. The research must not be for cosmetic or style improvements.
The Technology Jobs tax credit can be applied to taxes due on state gross receipts, compensating, and withholding taxes. Any remaining balance can be applied to personal or corporate income taxes.
This tax credit cannot be claimed under an Industrial Revenue Bond.
Veteran Employment Tax Credit (NM Taxation & Revenue Dept.)
The Veteran Employment tax credit will provide up to $1,000 to a business each time a recently discharged veteran is hired.
A qualified military veteran means an individual who is hired within 2 years of receipt of an honorable discharge from a branch of the U. S. military and who works at least 40 hours per week during the taxable year for which this tax credit is claimed.
Work Opportunity Tax Credit (NM Dept. of Workforce Solutions)
The Work Opportunity Tax Credit is designed to provide on-the-job experience to traditionally under-employed populations in order to move them toward economic self-sufficiency. There are 8 target groups:
- Unemployed Veterans & Veterans
- TANF Recipients
- SSI Recipients
- Designated Community Residents
- Food Stamp Recipients
- Vocational Rehabilitation Referrals
- Long-Term Family Assistance Recipients
The tax credit varies according to the new hire’s group. For hiring Long-Term Family Assistance recipients, the maximum tax credit is $4,000 for the first year and $5,000 for the second year. (The tax credit is 40% of the first $10,000 of wages paid in the first year and 50% of the first $10,000 of wages paid in the second year.)
For hiring a member of the other groups, the maximum tax credit is $2,400. (The tax credit is 40% of the first $6,000 of wages, if the employee is employed for at least 400 hours. For employees that worked at least 120 hours, but less than 400 hours, the tax credit is 25% of the first $6,000 of wages.)
To qualify, the new hire must increase the employer’s total number of jobs or replace a previously qualified employee.
The new hire must not result in the displacement of any currently employed worker or position, including partial displacement or supplanting an individual on lay-off.
The employer must qualify for the federal Work Opportunity Tax Credit to receive the New Mexico tax credit.
Any remaining balance may be carried forward for 3 years.
New Mexico also has a large number of tax credits that are targeted to specific industries. These industries include: advanced energy, agricultural water, biomass, film production, geothermal, laboratories, renewable energy, etc.
For a complete listing of all tax credits that are available to businesses in New Mexico, please visit the Department of Taxation and Revenue website at: http://www.tax.newmexico.gov/Tax-Professionals/tax-credits-overview.aspx