Business owners in New Mexico should explore these two state tax credits.
Key insights
- The Technology Jobs Tax Credit and the High-Wage Jobs Tax Credit may help business owners in New Mexico improve cash flow.
- Businesses can receive subsidies for investments in workforce and technology.
- The process to claim these incentives may not be straightforward — an advisor can help you navigate the process to identify, document, and claim these benefits.
Have tax credit questions?
Business owners in New Mexico may qualify for tax credits by adding employees or conducting certain activities in the state. While there’s an extensive list of credits available, let’s break down two specific opportunities: the Technology Jobs Tax Credit and the High-Wage Jobs Tax Credit.
Technology Jobs Tax Credit
New Mexico businesses performing qualified research in the state are eligible for the Technology Jobs Credit (which is also known as the Research and Development Tax Credit). The credit equals 5% of your qualified expenditures made within the state, and is available to offset compensating (use), gross receipts, and withholding taxes.
An additional 5% credit is available if a facility is located in certain rural areas, or when in-state payroll increases year-over-year by a specified amount. This additional credit can offset state personal or corporate income taxes.
For purposes of the credit, qualified research applies to research that:
- Is technological in nature
- Is intended to be used in the development of a new or improved business component
- Relates to new or improved function, performance, reliability, or quality
- Substantially relies on a process of experimentation
Qualified expenditures can include payroll, costs to operate or maintain a facility, computer software, and consultants performing work in New Mexico, to name a few examples.
High-Wage Jobs Tax Credit
The High-Wage Jobs Credit equals 8.5% of the wages paid to an eligible New Mexico employee in a new high-wage job, up to $12,750 per job per qualifying period. The credit can be applied against compensating (use), gross receipts, and withholding taxes. Additionally, any excess credits can result in a cash refund from the state.
Qualified jobs are those that:
- Pay at least $40,000 per year in a community with a population less than 60,000
- Pay at least $60,000 per year in a community with a population greater than 60,000
- Are filled for at least 44 weeks by the employee
Qualified employers must:
- Be growing, with employment greater than the previous year
- Be eligible for New Mexico’s Job Training Incentive Program
How we can help
It can be a challenge to determine whether these specific tax credits could benefit your business, and the process to claim these tax incentives is not always straightforward. For help developing a comprehensive tax strategy and navigating the process, reach out to our team.