Technology Jobs and Research and Development 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.

Eligible Uses 

  1. 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.
  2. 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).
  3. 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.