New Mexico Tax Deductions & IncentivesThe State of New Mexico and its communities offer employers aggressive incentives to encourage job creation and investment. Our financial incentives are designed to be an ongoing benefit meaning companies are rewarded for future expansions, so new and existing companies both can utilize these programs.

The flagship New Mexico Job Training Incentive program offers economic base companies a cash reimbursement for on-the-job training. The refundable High Wage Jobs Tax Credit supports job creators that pay $40,000 or more in rural areas and $60,000 in urban areas with a tax credit equal to 10% of the employee’s compensation.

New Mexico’s property taxes are among the lowest the nation for both real and personal property. Property taxes can further abated through the use of an Industrial Revenue Bond (IRB). Communities across New Mexico have the ability to issues IRB’s to support economic development projects. The State also provides an array of tax credits/incentives to offset gross receipts and compensating taxes such as those on manufacturing equipment as well as other industry specific credits.

New Mexico offers employers located in rural communities incentive enhancements as well as the Rural Jobs Tax Credit, which provides a credit for each job created in a rural area.

Contact the New Mexico Partnership today for a customized incentives analysis.


Closing Fund – Local Economic Development Act (LEDA)
Discretionary state incentive that can be used towards land, building or infrastructure.  Amount is determined on a project by project basis. The state of New Mexico just increases its LEDA amount for the FY17 (July 1,2016 through June 30,2017)  of $50 million.

Corporate Income Tax Reduction
The State of New Mexico approved a five year phased reduction of corporate income tax from the current top rate of 7.6% to 5.9%.

Corporate Income Tax Reduction Phases

Year <$500,000 $500,000 – $1 million >$1 million
2014 4.80% 6.40% 7.30%
2015 4.80% 6.40% 6.90%
2016 4.80% 6.40% 6.60%
2017 4.80% 6.20% 6.20%
2018 4.80% 5.90% 5.90%

In addition, the bill phases in a single sales factor apportionment methodology for the income of multi-state corporations, whose principal business activity is manufacturing and regional headquarters, over the same 5-year period.

Single Sales Factor for Manufacturers and Regional Headquarters
Effective in taxable year starting January 1,2014, businesses engaged in manufacturing  and regional headquarter operations may choose to take part in the phased-in single sales factor apportionment for calculation of their corporate income tax liability.

Year Phase-In Apportionment Formula
2014 Double-Weighted Sales
2015 Triple-Weighted Sales
2016 70% Sales
2017 80% Sales
2018 Single Sales Factor

Industrial Revenue Bond (IRB)
Industrial Revenue Bonds allow for significant real and personal property tax and compensating tax exemptions. Terms vary by community.

Job Training Incentive Program (JTIP)
The state’s highly flexible JTIP program offers a cash reimbursement to a business for on-the-job training for qualified employees of qualified employers. Customized training may be provided by post-secondary educational institutions, company trainers, or outside trainer. Click here for more information.

High Wage Jobs Tax Credit
This credit gives companies who hire employees at salaries of $40K or higher in rural areas, and $60K or higher in urban communities, tax credits equal to ten percent of salary for the year in which the job is created, and for the three following qualifying periods.

Consumables Gross Receipts Tax Deduction for Manufacturers
A seller may deduct receipts from sales to a manufacturer of tangible personal property that becomes an ingredient or component part of a manufactured product.
For the purposes of this deduction, “consumable” is defined as tangible personal property that is incorporated into, destroyed, depleted, or transformed in the process of manufacturing a product, including electricity, fuels, water, manufacturing aids and supplies, chemicals, gases, repair parts, spares, and other tangibles used to manufacture a product.

Manufacturers Investment Tax Credit
Manufacturers may take a credit against gross receipts, compensating or withholding taxes equal to 5.125% of the value of qualified equipment when the following employment conditions are met:

  • For every $500,000 of equipment, 1 employee must be added up to $30 million; and
  • For amounts exceeding $30 million, 1 employee must be added for each $1 million of equipment

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

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.

Rural Jobs Tax Credit
This credit can be applied to taxes due on state gross receipts, corporate income, or personal income tax.  Rural New Mexico is defined as any part of the state other than Los Alamos County; certain municipalities: Albuquerque, Rio Rancho, Farmington, Las Cruces, Roswell, and Santa Fe; and a 10-mile zone around those select municipalities.

Technology Jobs Tax Credit
Qualified New Mexico facilities may take a credit equal to 5 percent (10 percent 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 percent (10 percent 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.

New Mexico also offers industry-specific incentives in the following areas: 

 

pdf_12 List: New Mexico Taxes & Incentives