New Mexico Direct Financial Incentives
New Mexico's economic development, finance and tax organizations provide a range of incentive programs to initiate new business and commercial investment.
This credit gives companies who hire employees at salaries of $28K or higher in rural areas, and $40K or higher in urban communities, tax credits equal to ten percent of the combined salary and benefits package for the year in which the job is created, and for the three qualifying periods following.
Manufacturer's Investment Tax Credit:
Manufacturers may take a tax credit of 5.125% 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 $500,000 in qualified equipment claimed up to $30,000 spent; and one new job for each $1,000,000 in qualified equipment expenditures claimed over $30 million. As with all of these incentives, this can be stacked and provides the credit even if the tax was exempted under an IRB.
Rural Jobs Tax Credit:
Employers receive a credit of $1,000 for each qualifying job the employer creates, for four consecutive years in communities of less than 15,000 residents, and two consecutive years in non-MSA communities of more than 15,000 residents.
Technology Jobs Tax Credit:
This credit has two parts: a basic credit and an additional credit, each equal to 4% of the qualified expenditures on qualified research at a qualified facility. The credit amount doubles for expenditures in facilities located in rural New Mexico.
Basic credit: The taxpayer claims the credit within one year following the end of the year in which the expenditure was made. The credit amount is applied against the taxpayer's state gross receipts, compensating and withholding liabilities until the credit is exhausted.
Additional credit: A taxpayer earns the additional credit by increasing its payroll. The annual payroll must increase by at least $75,000 over the base period and by at least $75,000 for each $1 million in qualified expenditures (equivalent to $40,000 in credit) it wishes to claim. The credit is not refundable, but excess credit amounts may be carried forward.
Job Training Incentive Program:
Widely regarded as one of the most effective in the country, the Job Training Incentive Program provides classroom and on-the-job training, paying from 50 percent to 75 percent (depending on job skill level, pay scale, and geographic location) of employee training costs and wages for an expanding or relocating business for up to six months.
Single Sales Factor for Manufacturers
New Mexico will provide a phased-in election (over five years), for manufacturers to utilize a single sales factor income apportionment methodology. The present law double weighted sales factor with its “strings” is replaced in 2014 by the more straightforward election, which becomes triple weighted in 2015, multiplied by seven (over ten with the property and payroll factors times 1.5) in 2016, by eight (over 10) in 2017, and 100% weighted in 2018.
Corporate Income Tax Reduction
The corporate income tax act is amended to reduce the top corporate tax rate from its present law 7.6% to 5.9% over five years. The reduction begins in 2014, with a rate reduction to 7.3% followed by 6.9% in 2015 and 6.6% in 2016. In 2017, the top bracket is collapsed into the middle bracket (presently 6.4%), with a 6.2% rate. For tax years 2018 and following, the top bracket of two becomes 5.9%. The bottom 4.8% bracket remains the same.
Industrial Revenue Bonds:
Our communities can issue Industrial Revenue Bonds (IRBs) to exempt a substantial portion of a company's property taxes on land, buildings and equipment. IRBs vary by community, up to 95 percent for 20 to 30 years. In addition, the IRB provides a complete exemption for compensating taxes on equipment, generating approximately six percent savings.
Alternative Energy Product Manufacturer's 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 their capital expenses. The credit may be applied against gross receipts, compensating, or withholding tax and may be carried forward for up to five years.
Additional industry-specific incentives for aerospace and defense, value-added agriculture, energy and natural resources, tech commercialization, advanced manufacturing, logistics and distribution, digital media, and back office and technical support.
New Mexico Partnership
1720 Louisiana Blvd NE, Suite 312
Albuquerque, NM 87110
Incentive and tax information is provided to Area Development by each state's economic development or commerce agency for information purposes only and is subject to revision at any time by the state government. Please contact the state agency directly for full requirements and offerings.
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