Translate Our Site

Industry Specific Incentives

Advanced Manufacturing & Technology-based Companies

Advanced Energy Deduction & Advanced Energy Tax Credit

Receipts from selling or leasing tangible personal property or services that are eligible generation plant costs to a person who holds an interest in a qualified generating facility are deductible from gross receipts and compensating tax. In addition, a taxpayer who holds an interest in a qualified generating facility in New Mexico that files a corporate income tax return may claim a credit for 6% of the eligible generation plant costs of a qualified facility.

Alternative Energy Product Manufacturer’s Tax Credit

Provides for a credit equal to 5% of the value of qualified equipment and other property used directly and exclusively in a manufacturing operation that makes components or systems for alternative energy products.

Alternative Energy Product: an alternative energy vehicle, fuel cell system, renewable energy system or any component of an alternative energy vehicle, fuel cell system or renewable energy system or components for integrated gasification combined cycle coal facilities and equipment related to the sequestration of carbon from integrated gasification combined cycle plants, or, beginning in taxable year 2011 and ending in taxable year 2019, a product extracted from or secreted by a single cell photosynthetic organism.

The credit can be applied against compensating tax, gross receipts tax or withholding tax due. Any remaining credit can be carried forward for up to five years.

Employer must meet the following criteria for new jobs added:

  • Company must employ one new full-time employee for each $500,000 in qualified equipment up to $30,000,000 to receive the credit.
  • Company must employ one new full-time employee for each $1,000,000 in qualified equipment over $30,000,000 to receive the credit.

Angel Investment 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 $62,500 (25% of a qualified investment) for an investment made in each of up to five New Mexico companies that are engaging in manufacturing or qualified research, as defined by the Internal Revenue Code. The taxpayer may claim the angel investment credit for one qualified investment per investment round. Any portion of the tax credit remaining unused at the end of the taxpayer’s taxable year may be carried forward for five consecutive years.

BioScience Industrial Revenue Bonds

In addition to traditional IRBs issued by the City for manufacturers of bioscience products, the New Mexico Hospital Equipment Loan Council (https://www.nmhelc.org/) can issue IRBs for qualified non-profit and for-profit health-related research facilities. The Council is a governmental instrument separate and apart from the State of New Mexico. It provides for a tax exemption for health-related equipment acquired through bonds issued by the Council, and can finance any real or personal property, instrument, service, or operational necessity that is determined by the Council to be directly or indirectly needed for medical care, treatment or research, or to operate the health facility. This exemption is applicable for the life of the bond issue or loan, not to exceed 30 years from the date the bonds were issued. It is a significant benefit for borrowers who would not otherwise qualify for a property tax exemption under other constitutional or statutory provisions.

Consumables Gross Receipts Tax Deduction for Manufacturers

Starting in 2017, qualified manufacturers may deduct 100% of the gross receipt tax paid on consumables used in the manufacturing process. "Consumable" means tangible personal property that is incorporated into, destroyed, depleted, or transformed in the process of manufacturing a product and includes electricity, fuels, water, supplies, chemicals, gases, repair, and spare parts, but does not include tools or equipment used to create the product.

Manufacturing Investment Tax Credit

New Mexico tax law provides for a credit equal to 5.125% of the value of qualified equipment and other property used directly and exclusively in a manufacturing operation. The credit can be applied against compensating tax, gross receipts tax or withholding tax due. Gross receipts tax acts very much like a sales tax; the Albuquerque rate is 7.875%. Compensating (or use) tax applies to purchases made out of state and totals 5.125%.

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.

The credit may be claimed for equipment acquired under an IRB. This is a double benefit since no gross receipts or compensating tax was paid on the purchase or importation of the equipment.

Criteria

  • For Claims 1 New Worker Employed for Each
  • $0 - $30,000,000 $500,000 in qualified equipment
  • Over $30,000,000 $1,000,000 in qualified equipment

The credit at above levels is available until June 30, 2020. After that date, the value of equipment available for the credit is capped at $2 million.

IRBs

NM Small Business Innovation Research Matching Grant

New Mexico’s Small Business Innovation Research Matching Grant encourages the creation and expansion of commercial enterprises based in New Mexico through the acceleration of the commercialization of innovation and technologies developed with federal SBIR awards. The SBIR Matching Program provides matching funds to New Mexican companies that have been granted federal SBIR awards. The purpose of these funds is to assist businesses in achieving development and commercialization goals. This is a competitive program.

Single Sales Factor

Businesses engaged in manufacturing and eligible headquarters operations may elect a single sales factor option for calculating their corporate income tax. This election must be made in writing and must remain in effect for at least three consecutive taxable years containing 36 calendar months.

Manufacturing means combining or processing components or materials to increase their value for sale in the ordinary course of business. Does not include:

  • Construction
  • Farming
  • Power generation, except for electricity generated at a facility that does not require a certificate of convenience and necessity and location approved by the New Mexico Public Regulation Commission
  • Processing of natural resources

Headquarters operation is defined as a center of operations of a business:

  • Where corporate staff employees are physically employed
  • Where centralized functions are performed, including administrative, planning, managerial, human resources, purchasing, information technology and accounting, but not including operating a call center.
  • The function and purpose of which is to manage and direct most aspects and functions of the business operations within a subdivided area of the United States.
  • From which final authority over regional or subregional offices, operating facilities and any other offices of the business are issued.
  • Including national and regional headquarters if the national headquarters is subordinate only to the ownership of the business or its representatives and the regional headquarters is subordinate to the national headquarters.

An additional definition is the center of operations of a business:

  • The function and purpose of which is to manage and direct most aspects of one or more centralized functions; and
  • From which final authority over one or more centralized functions is issued.

The single sales factor election must be made in writing and will remain in effect until the tax payer notifies the New Mexico Taxation and Revenue Department that the election is terminated.

Technology Jobs & Research and Development Tax Deduction

Qualified New Mexico facilities may take a credit equal to 5% (10% in rural areas) of expenditures related to qualified research for payroll, land buildings, equipment, computer software and upgrades, consultants and contractors performing work in New Mexico, technical books, manuals and test materials. The credit may be taken against compensating tax, gross receipts tax (excluding the local options portion of the gross receipts tax), and withholding tax. The credit may be carried forward for up to three years.

An additional 5% (10% in rural areas) 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 for up to three years.

Credits are not available for:

  • Investments in real property owned by the city or the county in conjunction with an Industrial Revenue Bond
  • Investments in personal property that have been given a credit under the Investment Credit Act
  • National laboratories
  • Property owned by the tax payer or an affiliate before July 3, 2000
  • Contract research & development

Aerospace + Aviation

Aircraft Maintenance or Remodeling Tax Deduction

The following may be deducted from gross receipts: receipts from maintaining, refurbishing, remodeling or otherwise modifying a commercial or military carrier over 10,000 pounds gross landing weight.

Aircraft Manufacturing Tax Deduction

The following may be deducted from gross receipts:

  • receipts of an aircraft manufacturer or affiliate from selling aircraft or aircraft parts
  • services performed on aircraft or aircraft components
  • aircraft flight support, pilot training or maintenance training services

Directed Energy Systems and Satellites Gross Receipts Tax Deduction

Contractors, other than a national laboratory, that provide qualified research and development services for directed energy and satellite-related inputs to the United States Department of Defense, may deduct their receipts derived from such inputs and services. This deduction only applies to contracts with the Department of Defense entered into on or after January 1, 2016. This credit sunsets January 1, 2031.

Military Acquisition Program Tax Deduction

Receipts from transformational acquisition programs performing research and development, testing and evaluation at New Mexico major range and test facility bases pursuant to contracts entered into with the U.S. Department of Defense may be deducted from gross receipts. Programs performing research and development, and testing and evaluation at New Mexico major range and test facility bases may qualify.

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 Phillips Laboratory 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 Phillips Laboratory for resale to the Air Force, those receipts are also deductible.

Spaceport-Related Activities Gross Receipts Tax Credit

Businesses may deduct receipts from launching, operating, preparing, or recovering space vehicles or payloads from a spaceport in New Mexico and also from the provision of research and development, testing, and evaluation services for the U.S. Air Force Operationally Responsive Space Program. Tax credits are also available for research and development services sold or for resale to the U.S. Air Force.

Back Office & Technical Support

Financial Management Tax Credit

Receipts from fees received for performing management or investment advisory services for a related mutual fund, hedge fund, or real estate investment trust may be deducted from gross receipts.

Emerging & Digital Media and Film

Angel Investment 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 $62,500 (25% of a qualified investment) for an investment made in each of up to five New Mexico companies that are engaging in manufacturing or qualified research, as defined by the Internal Revenue Code. The taxpayer may claim the angel investment credit for one qualified investment per investment round. Any portion of the tax credit remaining unused at the end of the taxpayer’s taxable year may be carried forward for five consecutive years.

New Mexico Refundable Film Production Tax Credit

New Mexico offers one of the most competitive incentives package in the industry, which includes a 25% or 30% Refundable Film Production Tax Credit and the Film Crew Advancement Program. Beginning July 1, 2019, an additional 5% credit is available for productions shooting in rural areas outside of the Albuquerque/Santa Fe corridor. Eligible productions include feature films, independent films, television, national and regional commercials, video games, animation, webisodes, documentaries and post-production. There is no minimum spend or minimum budget requirement for qualifying projects. For complete information regarding the New Mexico Refundable Tax Credit, please visit www.nmfilm.com. For information about the City of Albuquerque Film Office, visithttps://www.cabq.gov/economicdevelopment/film

State Film Investment Loan Program

New Mexico offers a loan with participation in lieu of interest for up to $15 million per project (which can represent 100% of the budget) for qualifying feature film or television productions. Terms are negotiated. The following conditions must apply for qualification:

  • The budget must be at least $1 million and a guarantor for the principal loan and distribution agreement must be in place.
  • 85% of the film must be shot in New Mexico, with 60% of the below-the-line payroll allocated to New Mexican residents.

Web Hosting Gross Receipts Tax Deduction

Receipts from hosting World Wide Web sites may be deducted from gross receipts. Hosting means storing information on computers attached to the internet.

Logistics, Distribution & Transportation

Locomotive Fuel Gross Receipts & Compensating Tax Exemption

IRBs for Distribution Facilities