General Tax Credits
Industry-Specific Tax Credits and Deductions
GENERAL TAX CREDITS
High-Wage Jobs Tax Credit
A taxpayer who is an eligible employer may apply for and receive a tax credit for each new high-wage economic-base job. The credit amount equals 10% of the wages and benefits paid for each new economic-base job created.
- Pays at least $40,000/year in a community with a population of less than 40,000 for jobs created after July 1, 2015
- Pays at least $60,000/year in a community with a population of 40,000 or more for jobs created on or after July 1, 2015
- Occupied for at least 48 weeks by the employee
- Are growing with employment greater than the previous year; and
- Made more than 50% of its sales to persons outside New Mexico during the most recent 12 months of the employer’s modified combined tax liability reporting periods ending prior to claiming this credit; or
- Are eligible for the Job Training Incentive Program
Qualified employers can take the credit for 4 years. The credit may only be claimed for up to 1 year after the end of the 4 qualifying periods. The credit can be applied to the state portion of the gross receipts tax, compensating tax, and withholding tax. Any excess credit will be refunded to the taxpayer. The credit shall not exceed $12,000 per year, per job.
- Must be a resident of New Mexico
- Cannot be a relative of the employer or own more than 50% of the company
Manufacturer’s 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.
New Markets Tax Credit
The Statewide Economic Development Finance Act grants the New Mexico Finance Authority (“NMFA”) with broad authority to operate financing programs that stimulate economic development including the power to form, operate, own or co-own qualified Community Development Entities (“CDEs”) for the purpose of participating in the New Markets Tax Credit (“NMTC”) Program.
In 2006, the NMFA formed Finance New Mexico, LLC (“Finance New Mexico”), a qualified CDE, and in 2007, Finance New Mexico was awarded an allocation of $110 million in New Markets Tax Credits authority which will enable Finance New Mexico to generate approximately $35 million in capital that it will lend directly to qualified businesses in low-income areas.
The NMFA will operate the NMTC program on behalf of Finance New Mexico under the guidance of its adopted New Markets Tax Credit Program Policies and Procedures, Economic Impact Policies and Lending and Credit Policies. The NMTC program was established primarily to provide greater access to financing for new, expanding or relocating businesses in underserved areas across the country. NMFA is targeting the use of its allocation of tax credit incentives to add to existing statewide economic development initiatives.
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.
- Companies that manufacture or produce a product in New Mexico
- Non-retail service companies that export a substantial percentage of services out of state (50% or more revenues and/or customer base)
- Certain green industries
The rural area is divided into 2 tiers:
- Tier 2 = Non-metro area municipalities that exceed 15,000 in population: Alamogordo, Carlsbad, Clovis, Gallup, and Hobbs
- Tier 1 = Everywhere else in a rural area
The maximum tax credit amount with respect to each qualifying job is equal to:
- Tier 1: 25% of the first $16,000 in wages paid for the qualifying job (may be taken at $1,000 per year for 4 years)
- Tier 2: 12.5% of the first $16,000 in wages paid for the qualifying job (may be taken at $1,000 per year for 2 years)
A qualifying job is a job filled by an eligible employee for 48 weeks in a 12-month qualifying period.
The credit may be carried forward for up to 3 years.
Technology Jobs Tax Credit
A taxpayer that employs no more than 50 employees, has qualified expenditures of no more than $5 million, and who conducts qualified research and development at a facility in New Mexico is allowed a basic tax credit equal to 5% of qualified expenditures, and an additional 5% credit toward income tax liability by raising its in-state payroll $75,000 for every $1 million in qualified expenditures claimed. The tax credit doubles for expenditures in facilities located in rural New Mexico (as defined for this tax credit as anywhere outside a three-mile radius of an incorporated municipality with a population of 30,000 or more.
The taxpayer claims the credit within 1 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.
- Expenditures: Includes a wide range of non-reimbursed expenses such as payroll, consultants, and contractors performing work in New Mexico, software, equipment, technical manuals, rent, and operating expenses of facilities.
- Research: Must be technological in nature and constitute elements of a process of experimentation leading to new or improved function, performance, or reliability (not cosmetic, style).
- Facility: A building or group, with land and machinery, equipment and other real or personal property used in connection with the operation of the facility; excludes national labs.
Angel Investment Tax 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 qualified research, as defined by the Internal Revenue Code, or manufacturing. 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.
Download Local Incentive Applications Below:
Gross Receipts Investment Program – GRIP Ordinance
The City of Alamogordo has substantial resources available to assist businesses wishing to relocate or expand in City of Alamogordo. The Otero County Economic Development Council (OCEDC) works through its board and the City of Alamogordo, to qualify applicants and to negotiate agreements that allow businesses to take advantage of these resources.
INCENTIVE OPORTUNITIES MAY INCLUDE:
Property Tax Abatements
Industrial Revenue Bonds
Access to Loan Funds
Tax Increment Financing
Public Improvement Districts
Other Customized Incentives
ARE YOU ELIGIBLE?
Any existing or proposed corporation, limited liability company, partnership, joint venture, syndicate, association or other person is eligible provided that it meets one or more of the following criteria:
a. an industry for the manufacturing, processing, or assembling of an agricultural or manufactured products;
b. a commercial enterprise for storing, warehousing, distributing, or selling products of agriculture, mining or industry, but, other than provided in Paragraph (D) of this subsection, not including any enterprise for sale of goods or commodities at retail or for the distribution to the public of electricity, gas, water, or telephone or other services commonly classified as public utilities;
c. a business in which all or part of the activities of the business involves the supplying of services to the general public or to governmental agencies or to a specific industry or customer, but, other than provided in Paragraph (D) of this subsection, not including businesses primarily engaged in the sale of goods or commodities at retail;
d. a telecommunications sales enterprise that makes the majority of its sales to persons outside of New Mexico.
WHAT’S THE APPLICATION PROCESS?
Our process for awarding economic development incentives is governed by the Municipality’s Local Economic Development Act. The basic steps are as follows:
1. The OCEDC staff will meet with you to take application to determine eligibility for incentives offered through Alamogordo. Your specific needs will be discussed to ascertain how the City of Alamogordo or the OCEDC can assist you. A preliminary plan of action will then be developed.
2. A formal application for incentives and the information requested in this packet will be submitted to the OCEDC office. OCEDC will review the information and application with you in order to qualify you as a viable business partner, and to determine the economic benefits of your business to the City of Alamogordo. All of the information requested is required by law before any economic development incentives can be provided.
3. Once your application in complete, the OCEDC Board of Directors will assemble a Due Diligence Committee. The Committee will meet and review all documents, verify information, conduct appropriate investigations and inquiries, and assemble a report with their recommendations for incentives. The report will be forwarded to the OCEDC Executive Board of Directors for review, who in turn will make a recommendation to the full OCEDC Board of Directors. The full Board will review results and make a recommendation to the City Commission. Additional meetings maybe needed to answer questions and negotiate incentives. The amount and type of incentives offered will correlate directly to the positive economic impact that your project will have on the City of Alamogordo.
4. City of Alamogordo and OCEDC staff will draw up a formal Project Participation Agreement, outlining the exact responsibilities of each party, and forward it to the OCEDC Board for review and acceptance. OCEDC staff will then forward the Board’s recommendation to the City Commission, along with minutes of the Board meeting and any other pertinent background information.
5. The City of Alamogordo Council will make a final determination on the Agreement at a public hearing.