New Mexico

State Credit Name: New Mexico Research and Development Small Business Tax Credit; and Technology Jobs Tax Credit

Expiration Date: The R&D Small Business Tax Credit expires June 30, 2015. The Technology Jobs Tax Credit does not have an expiration date.

Who Can Apply?

• • For the R&D Small Business Tax Credit, any business that: 
    • employs 25 or less employees in a calendar month.
    • had a total revenue of no more than $5 million dollars in any fiscal year.
    • did not in any calendar month have more than 50% of its voting securities or other equity interest with the right to designate or elect the board of directors or other governing body of the qualified business owned directly or indirectly by another business.
    • has made QRE’s for the period of 12 calendar months ending with the month for which the credit is sought of at least 20% of its total expenditures for those 12 months.

• The Technology Jobs Tax Credit states that a taxpayer may apply for approval of credit within one year following the end of the calendar year in which the qualified expenditure was made.
  • Qualified Research: means research that is undertaken to discover information that is:
    • Technological in nature
    • Intended to be useful in the development of a new or improved business component of the taxpayer, and
    • Related to a new or improved function, performance, reliability or quality, but not related to style, taste, or cosmetic or season design factors.
  • Qualified Facility:  means a factory, mill, plant, refinery, warehouse, dairy, feedlot, building or complex of buildings located in New Mexico. These include the land on which the facility is located and all machinery, equipment and other real and tangible personal property located at or within the facility and used in connection with the operation of the facility. Any facility operated by the taxpayer for the United States is excluded.
  • Qualified Expenditures: any expenditure or allocated portion of an expenditure connected to qualified research at a qualified facility.

Credit Carry Forward:

• R&D Small Business Tax Credit: Offsets 50% of tax liability, so N/A
• Technology Jobs Tax Credit: Unlimited carry forward

About the Credit: 

• R&D Small Business Tax Credit: Credit is equal to 50% of the sum of all gross receipts taxes, compensating taxes or withholding taxes due to the state or payable by the taxpayer.
• Technology Jobs Tax Credit: Credit is 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. An additional 4% credit may be applied against state income tax if base payroll expenses increase by at least $75,000 per $1 million of expenses claimed.
  • The Basic Tax Credit may be applied against the taxpayer’s compensating tax, gross receipts tax, or withholding tax due to the state of New Mexico. 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 (PTE) approved for additional credit may pass the additional credit to its owners, partners or members using Form RPD-41368, Notice of Distribution of Technology Jobs Tax Credit. Any amount of credit not claimed for a reporting period may be claimed in subsequent reporting periods.
  • Recapture – If the taxpayer or a successor in business of the taxpayer ceases operations in New Mexico for 180 consecutive days within a two-year period, any approved unclaimed credit shall be extinguished. Within 30 days after the 180 days, the taxpayer shall pay the tax against which an approved technology jobs tax credit was taken.

Notes: Both credits cannot be used together.

Click here to find out if you qualify for the federal research credit.

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