Child Care Corporate Tax Credit
A New Mexico employer that pays for or provides child-care services for employees may claim a credit against corporate income tax equal to 30 percent of the total expenses, net of any reimbursements, for child-care services incurred in the taxable year. 7-2A-14 NMSA 1978
Corporate Income Tax Reduction
The corporate income tax act is amended to reduce the top corporate tax rate from its present law 7.6% to 5.9% over five years. The reduction begins in 2014, with a rate reduction to 7.3% followed by 6.9% in 2015 and 6.6% in 2016. In 2017, the top bracket is collapsed into the middle bracket (presently 6.4%), with a 6.2% rate. For tax years 2018 and following, the top bracket of two becomes 5.9%. The bottom 4.8% bracket remains the same. 7-2A-5 NMSA 1978
High-Wage Jobs Tax Credit
A credit may be applied for each new high-wage economic-based job equal to 10 percent of the wages and benefits for the year in which the new high-wage economic-based job is created and for the three following qualifying periods. The credit shall not exceed $12,000. If the credit exceeds the modified combined tax liability of the taxpayer, the excess shall be refunded to the taxpayer. 7-9G-1 NMSA 1978
Industrial Revenue Bonds
Significant real and personal property tax and compensating tax exemptions can occur through the use of an Industrial Revenue Bond (IRB). An IRB is a loan from the bond purchaser to a company where the loan proceeds and repayment flows through a governmental issuer. Instead of purchasing a facility directly, companies can enter into a lease with the issuer, provided the company will lease the facility from the issuer and at end of the lease, purchase the facility from the issuer for a nominal amount.
IRBs can also be used when a developer is involved. A separate series of bonds are issued to finance the developer’s real estate and building costs and the tax savings of the IRB can flow through to the ultimate user through a sublease.
The benefit of the remaining property tax exemptions can be passed on to the new owner or flow though a lease in the event of a sale or lease to a new user under certain qualifying conditions. Governing bodies of local governments must vote to induce an IRB, and the community does not lend its credit to an IRB. The company must secure its own purchaser of IRBs or the company can purchase its own IRB.
(The amount of the property tax exemption and the term of bond is determined by each local government.)
Job Mentorship Tax Credit
A credit equal to 50 percent of gross wages paid to qualified students employed during the taxable year may be applied to corporate income tax. The credit shall not exceed $12,000. 7-2A-17.1 NMSA 1978
Manufacturers Investment Tax Credit
Manufacturers may take a tax credit of 5.125 percent of the value of qualified equipment and other property used in their operation. The credit can be applied against compensating, gross receipts or withholding tax up to 85% of the total. Any remaining available credit may be claimed in subsequent reporting periods.
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.
Single Sales Factor for Manufacturers
New Mexico will provide a phased-in election (over five years), for manufacturers to utilize a single sales factor income apportionment methodology. The present law double weighted sales factor with its “strings” is replaced in 2014 by the more straightforward election, which becomes triple weighted in 2015, multiplied by seven (over ten with the property and payroll factors times 1.5) in 2016, by eight (over 10) in 2017, and 100% weighted in 2018.
Small Business R&D Tax Credit
A qualified small R&D business is eligible for a credit equal to the sum of all gross receipts taxes, compensating taxes or withholding taxes due to the state for up to three years.
Technology Jobs Tax Credit
A taxpayer who conducts qualified research and development at a facility in New Mexico is allowed a basic tax credit equal to four percent (4%) of qualified expenditures, and an additional four percent (4%) 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 Rio Rancho or more than 3 miles outside Bernalillo, Doña Ana, San Juan or Santa Fe counties).