Technology Jobs and Research and Development Tax Credit

The purpose of the credit is to provide a favorable tax climate for technology-based businesses engaging in research, development and experimentation and to promote increased employment and higher wages in those fields in New Mexico.

A taxpayer conducting qualified research at a qualified facility and making qualified expenditures of no more than $5 million in New Mexico is eligible to claim the basic technology jobs and research and development tax credit of 5% against the taxpayer’s compensating tax, withholding tax or gross receipts tax, excluding local option gross receipts tax. The tax credit will double to 10% for expenditures in facilities located in rural New Mexico. The approved basic credit may be carried forward for a period of up to three years.

• Technology Jobs and R&D Tax Credit Application 2015
   
• Technology Jobs and R&D Tax Credit Claim Form 2016
   
• Technology Jobs and R&D Credit Notice of Distribution Form 2015
   

That same taxpayer may apply for an additional tax credit of 5% against the taxpayer’s income tax or corporate income tax liability. The credit will double to 10% for taxpayers located in rural New Mexico. To qualify for the additional credit the taxpayer must increase the annual payroll expense $75,000 for every $1 million in qualified expenditures claimed. The taxpayer may not claim an amount that exceeds the taxpayer’s personal or corporate income for that reporting period. The additional credit may be carried forward for a period of up to three years.

For a qualified research and development small business, which is defined as having no more than 50 employees, they too, can claim the basic credit and the same rules apply to them. The qualified research and development small business can also claim the additional credit with the same rules. The qualified research and development small business can be refunded if the approved amount exceeds the taxpayer’s income tax liability or corporate income tax liability:

• Less than $3 million, the excess will be refunded.
• $3 million to less than $4 million, two-thirds of the excess will be refunded.
• $4 million to $5 million, one-third of the excess will be refunded.