Incentives
The Albuquerque metro area and the State of New Mexico provide aggressive incentives to reduce the overall cost of business. If you would like a customized, confidential incentive analysis based on your company’s potential investment and employment, we are more than happy to run a calculation for you. Contact our staff.
Some of the most significant state and local incentive programs include:
Tax Abatements:
Job Training:
Tax Credits
NM Film Incentives
Job Training Incentive Program (JTIP)
Highly flexible state program to provide on-the-job training for qualified employees of qualified employers. Customized training may be provided by post-secondary educational institutions, company trainers, or outside trainers.
The state will reimburse for:
- Up to 40 percent of trainees’ wages up to 1,040 hours for companies located in urban areas
- Up to 65 percent of trainees’ wages for up to 1,040 hours for companies located in rural areas;
- Classroom training costs provided by New Mexico post-secondary educational institutions, ($35 per hour for instructors’ time capped at $1,000 per employee).
Conditions
- Must be a new or expanding company in New Mexico that manufactures/produces a product or a non-retail company that generates more than 50 percent of its service revenue from outside the state.
- Contract customer service centers must meet or exceed at least percent of the median county wage to qualify.
- Maximum wage reimbursement is tied to hours required to learn the job and the hourly wage.
- “Hands-on” or production jobs qualify; technical jobs such as first-line supervisors and engineering generally qualify; support, administrative and sales positions are limited to 10 percent of total number of positions that qualify for funding, e-training does not qualify for assistance.
- Companies can apply for subsequent assistance if they have maintained hiring levels that exceed the peak employment as established by the initial application.
- In urban areas, companies hiring more than 20 people must offer health insurance and subsidize at least 50 percent of the premium for employees who elect coverage.
- Temporary to permanent employees qualify provided trainees becomes full-time employees of the company prior to the end of the approved training period; and trainees working through temprary agency receive comparable medical, dental and vision benefits as full-time employees of the company
- Reimbursement is subject to availability of funds and approval by the Job Training Incentives Board.
Industrial Revenue Bonds (IRB)
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. City Council or County Commission 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 community.*
High Wage Jobs Tax Credit
Provides businesses with a tax credit equal to 10 percent of the combined value of salaries and benefits for each net new job paying a net taxable wage of at least $40,000 per year in the Albuquerque metropolitan area and other communities larger than 40,000 in population. Companies located in communities with a population less than 40,000 are eligible for the same tax credit for each net new job paying a net taxable wage of at least $28,000.
Qualified employers can take the credit for four years. The refundable credit can be applied against the modified combined tax liability of the taxpayer, including the state portion of the gross receipts tax, compensating tax and withholding tax. Excludes the local portion of the gross receipts tax. Employees must be hired prior to July 1, 2015.
Conditions:
- Net taxable wages, without company paid benefits, must equal at lease $40,000 in an urban community or $28,000 in a rural area to qualify as a high wage job.
- Net taxable wages include: hourly wage, bonus, salary, vacation, sick/holiday time.
- Company must generate more than 50% of its sales outside of New Mexico or must be eligible for the Job Training Incentive Program.
- Employer must be growing in employment greater than the year before.
- Eligible employees cannot be relatives of the qualified employer or own more than 50% of the company.
- Jobs must be occupied by an eligible employee for 48 weeks.
Manufacturing Investment Tax Credit
New Mexico tax law provides for a credit equal to 5.125 percent of the value of qualified equipment and other property used directly and exclusively in a manufacturing operation. The credit can be applied against compensating, gross receipts tax or withholding tax due. Gross receipts tax acts very much like a sales tax; the Albuquerque rate is 7.0 percent. Compensating (or use) tax applies to purchases made out of state and totals 5.125 percent.
The credit is limited to 85 percent of the sum of the taxpayer’s gross receipts tax, compensating tax, and withholding tax due for the reporting period. Any remaining available credit may be claimed in subsequent operating periods.
The credit may be claimed for equipment acquired under an IRB. This is a double benefit since no gross receipts or compensating tax was paid on the purchase or importation of the equipment.
Criteria
| For Claims |
1 New Worker Employed for Each |
| $0 - $30,000,000 |
$500,000 in qualified equipment |
| Over $30,000,000 |
$1,000,000 in qualified equipment |
The credit at above levels is available until June 30, 2020. After June 30, 2020, the value of equipment available for the credit is capped at $2 million.
Alternative Energy Product Manufacturer’s Tax Credit
Provides for a credit equal to 5 percent of the value of qualified equipment and other property used directly and exclusively in a manufacturing operation that makes components or systems for alternative energy products.
Alternative Energy Product: an alternative energy vehicle, fuel cell system, renewable energy system or any component of an alternative energy vehicle, fuel cell system or renewable energy system or components for integrated gasification combined cycle coal facilities and equipment related to the sequestration of carbon from integrated gasification combined cycle plants.
The credit can be applied against compensating, gross receipts tax or withholding tax due. Any remaining credit can be carried forward for up to five years.
The effective date of this credit is July 1, 2007.
Criteria
Employer must meet the following criteria for new jobs added:
- Company must employ one new full-time employee for each $500,000 in qualified equipment up to $30,000,000 to receive the credit
- Company must employ one new full-time employee for each $1,000,000 in qualified equipment over $30,000,000 to receive the credit
Technology Jobs Tax Credit
Qualified New Mexico facilities may take a credit equal to 4 percent (8 percent in rural areas) of expenditures related to qualified research for land, buildings, equipment, computer software and upgrades, consultants, technical books and manuals, test materials, costs associated with patents, payroll, and labor. The credit may be taken against gross receipts tax, compensating tax or state payroll tax, and may be carried forward.
An additional 4 percent (8 percent total urban, 16 percent total rural) may be applied against state income tax if base payroll expenses increase by at least $75,000 per $1,000,000 of expenditures claimed. The credit may be carried forward.
Credits are not available for expenditures on buildings owned by a local government entity in
conjunction with an Industrial Revenue Bond or already owned by the taxpayer or an affiliate before February 2000.
New Mexico Refundable Film Production Tax Credit
The state offers a 25 percent production refundable tax credit on all direct production and post production expenditures, including New Mexico crew, that are subject to taxation by the State of New Mexico. Eligible productions include feature films, independent films, television, national and regional commercials, video games, animation, webisodes, documentaries, and post-production (including "stand-alone" post production). There is no minimum expense requirement and no minimum shoot day requirement. There is a $50M rolling cap.
State Film Investment Loan Program
New Mexico offers a loan with participation in lieu of interest for up to $15 million per project (which can represent 100 percent of the budget) for qualifying feature film or television productions. Terms are negotiated. The following conditions must apply for qualification:
- The budget must be least $1 million and a guarantor for the principal loan and distribution agreement must be in place.
- 85 percent of the film must be shot in New Mexico, with 60 percent of the below-the-line payroll allocated to New Mexican residents.