BUSINESS INCENTIVES

New Mexico offers a number of competitive incentive programs to help position your company for growth.

business incentives

The Albuquerque metro area and the State of New Mexico offer aggressive business incentives to help reduce your overall cost of doing business. From corporate income tax rates to workforce training, we offer excellent programs with a business friendly attitude.

OVERVIEW OF MAJOR INCENTIVES

Learn more about the incentives New Mexico offers expanding employers by downloading this summary booklet.

Some of the most significant state and local incentive programs include:

Industrial Revenue Bonds (IRB)

Significant real and personal property tax abatement 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 through 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.

Note: The amount of the property tax exemption and the term of bond is determined by each community.

Job Training Incentive Program (JTIP)

Highly flexible state program to provide classroom and 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 50 percent of trainees’ wages up to 1,040 hours for companies located in urban areas and up to 65 percent of trainees’ wages up to 1,040 hours for companies located in rural areas
- Companies may receive an additional wage reimbursement of 5 percent for an eligible high-wage job
- Companies may receive an additional 5 percent reimbursement for one of the three following conditions, provided the entry wage is at least the minimum rate for the Job Zone as outlined in the JTIP wage chart for Zones 1, 2, 3 and 4:
  - Trainee has graduated within the past twelve months from a post-secondary training or academic program at a New Mexico institution of higher education
  - Trainee is a U.S. Veteran
  - Trainee has graduated out of the New Mexico Foster Care System
Classroom training costs provided by New Mexico post-secondary educational institutions, ($35 per hour for instructors’ time capped at $1,000 per employee).

Company Eligibility

Must be a new or expanding company in New Mexico that manufactures/produces a product or a non-retail service company that generates more than 50 percent of its revenue from outside the state.
- Contract-based customer service centers must provide evidence of a minimum 5-year lease or purchase of a facility in New Mexico.
- Contract-based customer centers must offer employees and their dependents health insurance coverage and must contribute at least 50 percent of the premium for health care insurance for those employees who choose to enroll.
Corporate, international, national, regional and divisional headquarters located in New Mexico may qualify provided at least 50 percent of revenues are derived from operations outside New Mexico.
Manufacturers which perform research and development and engineering functions for their own products in New Mexico, but manufacture elsewhere are eligible.
Start-ups and early stage manufacturing company may be eligible. The company must be adequately capitalized to reach first production and/or able to deliver service per criteria and procedures as set forth by and at the discretion of the JTIP board.
Distribution is another category of non-retail business service providers. Distributors qualify for JTIP if at least 50 percent of their customer base is located outside of New Mexico.
Aviation Maintenance, Repair and Overhaul (MRO) operations qualify for JTIP.

Conditions

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 20 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 become full-time employees of the company prior to the end of the approved training period; and trainees working through temporary agency receive comparable medical, dental and vision benefits as full-time employees of the company.
Positions must be filled within 6 months of JTIP application approval.
Reimbursement is subject to availability of funds and approval by the Job Training Incentives Board.

For more information please visit the New Mexico Economic Development Business Development Center: Job Training Incentive Program.

Refundable High Wage Jobs Tax Credit

Provides businesses with a tax credit equal to 8.5 percent of salaries for each net new job paying a net taxable wage of at least $60,000 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 $40,000. 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. This credit is set to sunset on June 30, 2026.

Conditions

Net taxable wages must equal at lease $60,000 in an urban community or $40,000 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 be eligible for the Job Training Incentive Program (JTIP), as defined in the JTIP 2019 Policy and Procedures Manual.
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 percent of the company.
Jobs must be occupied by an eligible employee for 44 weeks.
The credit will not exceed $12,750 per eligible employee in each qualifying period.
Any taxpayer that ceases operations in New Mexico must wait at least 2 calendar years before submitting a new application for the credit.

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 tax, gross receipts tax or withholding tax due. Gross receipts tax acts very much like a sales tax; the Albuquerque rate is 7.875 percent. Compensating (or use) tax applies to purchases made out of state and totals 5.125 percent. Beginning on July 1, 2021 the credit will expand to apply against the compensating tax and/or local gross receipts rate.

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.Beginning on July 1, 2021 the credit is limited to 5.125% when applied to equipment acquired under an IRB.

Criteria

For Claims	1 New Worker Employed for Each
$0 – $30,000,000	$750,000 in qualified equipment
Over $30,000,000	$1,000,000 in qualified equipment

Aerospace & Aviation Incentives

Aircraft Manufacturing and Maintance Service Tax Deduction

Receipts of an aircraft manufacturer or affiliate from selling aircraft or aircraft parts; services performed on aircraft or aircraft components; and aircraft flight support, pilot training or maintenance training services, may be deducted from gross receipts. Receipts from selling aircraft parts or maintenance services for aircraft or aircraft parts, may be deducted from gross receipts.

Commercial or Military Aircraft Tax Deduction

Receipts from the sale of or the maintaining, refurbishing, remodeling or otherwise modifying a commercial or military carrier over 10,000 lbs gross landing weight may be deducted from gross receipts.

Space Gross Receipts Tax Credit

In New Mexico, businesses may deduct receipts from launching, operating, and recovering space vehicles or payloads; preparing a payload; and operating a spaceport. Additionally, receipts from the provision of research, development, testing and evaluation services for the U.S. Air Force operationally responsive space program may be deducted from gross receipts.

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 tax, gross receipts tax or withholding tax due. Any remaining credit can be carried forward for up to five years.

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

Other Incentives

Gross Receipts Tax Deduction on Consumables Used in the Manufacturing Process

Starting in 2017, qualified manufacturers may deduct 100 percent of the gross receipt tax paid on consumables used in the manufacturing process. “Consumable” means tangible personal property that is incorporated into, destroyed, depleted, or transformed in the process of manufacturing a product and includes electricity, fuels, water, supplies, chemicals, gases, repair, and spare parts, but does not include tools or equipment used to create the product.

Technology Jobs and Research and Development Tax Credit

Qualified New Mexico facilities may take a credit equal to 5 percent (10 percent in rural areas) of expenditures related to qualified research for payroll, land buildings, equipment. computer software and upgrades, consultants and contractors performing work in New Mexico, technical books, manuals and test materials. The credit may be taken against compensating tax, gross receipts tax (excluding the local options portion of the gross receipts tax), and withholding tax. The credit may be carried forward for up to three years.

An additional 5 percent (10 percent in rural areas) 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 for up to three years.

Credits are not available for:

Investments in real property owned by the city or the county in conjunction with an Industrial Revenue Bond
Investments in personal property that have been given a credit under the Investment Credit Act
National Laboratories
Property owned by the tax payer or an affiliate prior to July 3, 2000
Contract research & development

Directed Energy Systems Gross Receipts Tax Deduction

Contractors, other than a national laboratory, that provide qualified research and development services for directed energy and satellite-related inputs to the United States department of defense, may deduct their receipts derived from such inputs and services. This deduction only applies to contracts with the department of defense entered into on or after January 1, 2016. This credit sunsets January 1, 2030.

Get a personalized incentives analysis for your company.

If you would like a customized, confidential incentives analysis based on your company’s potential investment and projected employment numbers, we are more than happy to run a calculation for you. Please contact Debra Inman at 505-705-3784 or dinman@abq.org.