The New Mexico Guide to State Tax Incentives

Do you own a business in New Mexico (or have startup plans in the works)? If so, you’re in luck. The state has over a dozen unique business tax incentive programs that can reduce your operation’s annual tax payments. From industry-specific tax credits to hiring incentives, there’s something for everyone. Keep reading for a complete list.

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New Mexico business tax incentives

Industry-specific incentives

Advanced Energy Tax Credit

The Advanced Energy Tax Credit is available to qualified electricity-generating facilities in New Mexico. The amount of credit is equal to 6% of eligible generation plant costs; businesses can apply it against their corporate or personal income tax, compensating tax, withholding tax, or gross receipts tax.

To be a qualified electricity-generating facility, you need to have begun construction no later than December 31, 2015, and fall into one of the below categories:

A solar thermal electric-generating facility that begins construction on or after July 1, 2007, and that may include an associated renewable energy storage facility
A solar photovoltaic electric-generating facility that begins construction on or after July 1, 2009, and that may include an associated renewable energy storage facility
A geothermal electric-generating facility that begins construction on or after July 1, 2009
A recycled energy project if that facility begins construction on or after July 1, 2007
A new or repowered coal-based electric generating facility and an associated coal gasification facility

Download the application form here.

Alternative Energy Product Manufacturer’s Tax Credit

The Alternative Energy Product Manufacturer’s Tax Credit is available to alternative energy manufacturing companies in New Mexico that purchase new equipment. The credit is equal to 5% of qualified expenditures for manufacturing equipment used in a manufacturing operation that produces alternative energy products.

To qualify for the credit, a manufacturing company must meet the following requirements:

Hire new employees to perform production tasks in conjunction with manufacturing equipment not previously existing at the site.
Employ at least one new full-time employee for every $500,000 (or a portion of that amount) of qualified expenditures claimed in a tax year, up to $30 million
Employ at least one new full-time employee for every $1 million (or a portion of that amount) of qualified expenditures claimed in a tax year over $30 million

Download the credit application here to learn more and see if you qualify.

Angel Investment Credit

The Angel Investment Credit incentivizes individual angel investors to put their money in New Mexico companies engaging in qualified research or manufacturing. Qualified investors can get a credit equal to 25% of their investment amount, up to $62,500.

See the application form here.

Biodiesel Blending Facility Tax Credit

This tax credit is available to New Mexico companies that install biodiesel blending equipment in their facility to either begin a new blended biodiesel fuel operation or expand an existing one. The tax credit is equal to 30% of the cost of the blending equipment plus 30% of the cost of installing that equipment. The maximum credit amount for equipment installation is $50,000.

To qualify for the credit, you must be one of the following:

An operator of a refinery in New Mexico
Someone who blends special fuel in New Mexico
The owner of special fuel stored at a pipeline terminal in New Mexico

Fill out this form to request approval before you claim the credit.

Agricultural Biomass Corporate Income Tax Credit

The Agricultural Biomass Corporate Income Tax Credit is available to New Mexico agricultural biomass production facilities—dairy farms or feedlots that collect animal waste and transfer it to other facilities for the purpose of generating electricity.

The amount of credit depends on the amount of biomass transported; qualified production facilities can get $5 per wet ton of biomass. Production facilities can also get tax deductions on qualified equipment used to produce biomass, including boilers, turbine generators, storage facilities, feedstock processors, and interconnection transformers.

Learn more about the credit and download the application form here.

Film Production Tax Credits

Film New Mexico offers a tax credit to qualified film production companies that set their projects in New Mexico. The credit amount starts at 25% of qualified production and post-production spending within the state.

Businesses that meet certain requirements—like incurring expenditures in areas at least 60 miles outside Albuquerque and Santa Fe—are eligible for additional credit uplifts or increases.

There’s also a Non-Resident Below the Line Crew (NRCE) program, which gives qualified film production companies a tax credit equal to 15% of wages paid to below-the-line crew members who are not residents of New Mexico—and who contribute directly to the production of films or commercial audiovisual projects in the state.

Learn more about the credits here.

Technology Jobs and Research and Development Tax Credit

The Technology Jobs and Research and Development Tax Credit is designed to support tech-based businesses engaging in research and development (R&D) activities within New Mexico. Qualified R&D activities must be research businesses undertake for the purpose of discovering information that is:

Technological in nature;
Useful to the development of a new or improved business component; and
Related to a new or improved function, performance, reliability, or quality of the business.

The basic R&D tax credit is equal to 5% of a company’s qualified research expenditures—under $5 million—made at a qualified facility. If a company incurs R&D expenses in a facility located in a rural area, the tax credit doubles to 10%.

See the credit application here.

Hiring incentives

High Wage Jobs Tax Credit

New Mexico’s High Wage Jobs Tax Credit incentivizes employers to create new high-paying jobs within their businesses. The credit amount is equal to 8.5% of the wages and benefits paid to each new economic-based job created, up to $12,750 per job.

To be considered a qualified employer, businesses must increase their employment over the previous year and qualify for the state’s Job Training Incentive Program. They also have to meet the following requirements:

Hire employees who are residents of New Mexico (employees cannot be related to the employer, nor can they own more than 50% of the company or its stock)
Pay at least $40,000 a year if the community has a population of less than 60,000 and at least $60,000 a year if a community has a population of 60,000 or more
Keep the employee for at least 44 weeks

See the job credit application here.

Investment Tax Credit for Manufacturers

New Mexico gives companies a tax credit for purchasing certain manufacturing equipment—and for meeting employment minimums. The credit amount varies:

The credit is equal to 5.125% of the value of the qualified equipment if the qualified equipment was subject to compensating tax in New Mexico
If the qualified equipment sale was subject to gross receipts tax in New Mexico, the credit is equal to the gross receipts tax paid multiplied by the value of the qualified equipment
If the purchase of the qualified equipment was not subject to gross receipts tax or compensating tax, the credit is equal to 5.125% of the value of the qualified equipment

To qualify for the credit, you need to employ one additional full-time employee for every $750,000 (or portion of that amount) in value of qualified equipment, up to a value of $30 million, and employ one additional full-time employee for every $1 million (or portion of that amount) in value of qualified equipment over $30 million.

See the complete credit application here.

Rural Jobs Tax Credit

The Rural Jobs Tax Credit is available to qualified businesses that operate in rural areas of New Mexico, including municipalities like Albuquerque, Rio Rancho, Farmington, Las Cruces, Roswell, and Santa Fe.

Eligible companies include those that manufacture or produce a product in New Mexico, non-retail service companies that export more than 50% of their services—or serve more than 50% of their customers—out of state, and businesses in certain green industries.

To qualify for the credit, businesses need to be located in a designated rural area and create new jobs. The credit amount varies depending on which Tier businesses are located in:

Tier 1 businesses get 25% of the first $16,000 in wages paid for the qualifying job
Tier 2 businesses get 12.5% of the first $16,000 in wages paid for the qualifying job

Tier 2 is composed of non-metro area municipalities that exceed 15,000 in population, like Alamogordo, Carlsbad, Clovis, Gallup, and Hobbs. Tier 1 is considered everywhere else in a rural area.

Learn more about the job credit here.

Job Training Incentive Program

The Job Training Incentive Program (JTIP) reimburses employers for providing on-the-job training to employees. Businesses located in urban areas can get reimbursed up to 50% of employees’ wages up to 1,040 hours; businesses located in rural areas can get up to 65% of employees’ wages for up to 1,040 hours.

Businesses that offer high-wage jobs can get an additional 5% reimbursement. Plus, companies that meet one of the following conditions can get another 5% reimbursement:

Their new employee is a US veteran
The new employee has graduated within the past 12 months from a post-secondary training or academic program at a New Mexico college or university
The new employee has graduated from the New Mexico Foster Care System

To be eligible for JTIP, a business must either manufacture a product in New Mexico or provide non-retail services that generate more than 50% of revenue from outside the state. Get a complete breakdown of the program—and how to apply—here.

Alternative energy incentives

Renewable Energy Production Tax Credit

The Renewable Energy Production Tax Credit is available to New Mexico companies that own a qualified energy generator. The credit amount is equal to $0.01 per kilowatt hour of electricity produced by the qualified energy generator using a qualified energy resource in the tax year. Electricity produced using solar energy is eligible for a higher credit, with a rate starting at 1.5 cents in the first year of operation and increasing in increments of 0.5 cents.

To qualify for the credit, the facility has to generate at least one megawatt. Learn more about the credit here, or check out the form here to claim the credit.

New Solar Market Development Tax Credit

The New Solar Market Development Tax Credit is available to companies and individuals that install solar energy systems on their residential, commercial, or agricultural properties. The credit amount is 10% of the solar system value, up to $6,000.

Businesses can only use this credit to offset personal tax liabilities—not corporate ones. Learn more about the credit here.

Sustainable Building Tax Credit

New Mexico’s Sustainable Building Tax Credit incentivizes construction companies to invest in sustainable building practices and energy-efficient products.

Eligible companies can get a tax credit for installing certain energy conservation products in their commercial facilities. The credit amount ranges from $500 to $1,000—here are the credit caps. Companies can also get a credit for starting a new construction or renovation project; the amount varies.

You can learn more about the Sustainable Building Tax Credit here.

Ready to bring environmental sustainability to your business? Start by writing a sustainability plan.

General incentives

Child Care Tax Credit

New Mexico companies can get a 30% tax credit for providing child care services to their employees—or for reimbursing their employees for child care services. The credit cannot exceed $40,000 in the tax year.

Get more information here.

New Mexico business tax deductions

New Mexico offers a handful of key business tax deductions for businesses in certain industries:

Gross Receipts Tax Deduction for Manufacturing Equipment and Consumables: Qualified manufacturing businesses can deduct 100% of the gross receipts tax or compensating tax paid on manufacturing consumables used in the manufacturing process. Consumables refers to tangible personal property like electricity, fuels, water, and manufacturing aids and supplies.
Directed Energy Systems Gross Receipts Tax Deduction: Through 2030, contractors that provide qualified R&D services for directed energy and satellite-related inputs to the US Department of Defense can deduct their receipts from those services.
Space Gross Receipts Tax Deduction: Businesses can deduct receipts from launching, operating, and recovering space vehicles or payloads, preparing a payload, and operating a spaceport.
Commercial or Military Aircraft Tax Deduction: Businesses can deduct receipts from selling, maintaining, refurbishing, or remodeling a commercial or military carrier whose gross landing weight is over 10,000 pounds.
Solar Gross Receipts Tax Deduction: Businesses that sell or install solar energy systems that provide hot water, electricity, or space heat to the property they’re installed at can deduct the cost from their gross receipts.
Gross Receipts Tax Deduction for Solar and Wind Systems: Businesses that sell solar thermal electric, photovoltaic, and wind systems to federal, state, or local government entities can deduct the cost from their gross receipts.

New Mexico city and county tax credits

Business incentives aren’t just available at the state level in New Mexico—many cities and counties also have their own tax credit and exemption programs. Find your city’s website here to explore your options.

Financing for New Mexico businesses

If you need more financial assistance to stabilize or scale your business, state-run resources can help. New Mexico has a range of business loans and grants available to businesses across industries—check out our guide to business grants and loans in New Mexico.