New Mexico Business Tax Incentives FAQs

Yes. A film production company that meets the requirements of the Film Production Tax Credit Act may apply for a credit equal to 25% to 35% of qualified spending made in New Mexico. This incentive is aimed at encouraging film production activity within the state.

New Mexico lists several energy-related incentives, including the Advanced Energy Deduction and Advanced Energy Tax Credit, Alternative Energy Product Manufacturer’s Tax Credit, Biodiesel Blending Facility Tax Credit, Biomass-Related Equipment and Materials Deduction and Renewable Energy Production Tax Credit. These incentives generally support qualified energy generation, alternative energy manufacturing, biodiesel blending, biomass equipment and renewable energy production.

This deduction allows a seller to deduct receipts from sales to a manufacturer when the tangible personal property becomes an ingredient or component of a manufactured product. New Mexico defines consumables broadly to include property incorporated into, destroyed, depleted or transformed in the manufacturing process, including electricity, fuels, water, chemicals, gases, repair parts and manufacturing supplies.

The Angel Investment Credit may be available to qualified investors who invest in certain New Mexico companies engaged in qualified research or manufacturing. The credit is generally equal to 25% of a qualified investment, up to $62,500. The investor must file a New Mexico income tax return, and unused credit may be carried forward for five consecutive years.

This credit can be useful for investors backing early-stage companies, but qualification is not automatic. The company, the investor and the investment itself must meet specific requirements.

Yes. New Mexico offers the Technology Jobs and Research and Development Tax Credit for taxpayers conducting qualified research at a qualified facility and making qualified expenditures in the state. The basic credit is 5% of qualified New Mexico expenditures or 10% for facilities located in rural New Mexico. The credit can be applied against compensating tax, withholding tax or gross receipts tax, excluding local option gross receipts tax. No taxpayer may claim an amount of approved basic credit for any reporting period that exceeds the sum of the taxpayer’s gross receipts tax, compensating tax, and withholding tax due for that reporting period.

The Additional Tax Credit may be applied against the taxpayer’s personal or corporate income tax. No taxpayer may claim an amount of additional credit for any reporting period that exceeds the amount of the taxpayer’s personal or corporate income tax due for that reporting period. A husband and wife may each claim only one-half the additional credit. A pass-through entity approved for additional credit may pass the additional credit to its owners, partners, or members using Form RPD-4136.

New Mexico manufacturers may be able to claim an investment tax credit equal to 5.125% of the value of qualified equipment. The credit can be applied against gross receipts, compensating or withholding taxes when employment requirements are met. In general, one employee must be added for every $500,000 in equipment up to $30 million and one employee must be added for each $1 million in equipment above that amount.

To claim the credit, the manufacturer simply reduces its tax payment to the state (by as much as 85% per reporting period) until the amount of investment credit is exhausted. There also are provisions for issuing a refund when the credit balance falls under $500,000. The credit does not apply against local gross receipts taxes.

The High Wage Jobs Tax Credit is designed for eligible employers that create new high-wage economic-base jobs in New Mexico. The credit equals 8.5% of wages and benefits paid for each qualifying new job, up to $12,750 per job. To qualify, the job must pay at least $40,000 per year in communities with fewer than 60,000 residents or at least $60,000 per year in larger communities. The employee must occupy the job for at least 44 weeks.

New Mexico offers several tax advantages that may appeal to businesses looking to expand, relocate or invest in the state. The state does not impose an inventory tax, intangible property tax, estate tax, inheritance tax or gift tax. It also does not tax real estate transactions or property moving through New Mexico when the property is warehoused for delivery outside the state.

For manufacturers, New Mexico may be especially attractive. The state offers single sales factor apportionment and does not impose gross receipts tax on certain manufacturing consumables, including electricity and natural gas. These provisions can make a meaningful difference when a company is evaluating location, expansion or long-term business tax planning decisions.