To encourage companies to supply our growing markets, New Mexico has adopted among the country’s most aggressive incentives. A partial list includes:
- General Tax Credits
- Industry-Specific Tax Credits and Deductions
- Technical Assistance
General Tax Credits
The Clovis Industrial Development Corporation is a private, nonprofit organization that works with qualified businesses on an individual basis to provide land, buildings, and financial incentives for industrial development.
Companies may take a credit equal to ten percent of the combined value of salaries and benefits for each new job paying a minimum of $28,000 per year in areas with populations less than 40,000 persons; companies located in larger areas must pay salaries of $40,000 to receive the credit. Qualified employers may take the credit for up to four years and any excess credit will be refunded to the business. The credit shall not exceed $12,000 per year, per job. The credit is applied against the businesses tax liability, including the state portion of gross receipts tax, compensating tax and withholding tax.
Manufacturers may take a tax credit of five percent of the value of qualified equipment and other property used in their operation. The credit can be applied against compensating, gross receipts or withholding tax up to 85% of the total. Any remaining available credit may be claimed in subsequent reporting periods. In addition, the company must add one new job for each credit up to $30 million; and one new employee must be hired for each $500,000 in equipment.
The Statewide Economic Development Finance Act grants the New Mexico Finance Authority (“NMFA”) with broad authority to operate financing programs that stimulate economic development including the power to form, operate, own or co-own qualified Community Development Entities (“CDEs”) for the purpose of participating in the New Markets Tax Credit (“NMTC”) Program.
In 2006, the NMFA formed Finance New Mexico, LLC (“Finance New Mexico”), a qualified CDE, and in 2007, Finance New Mexico was awarded an allocation of $110 million in New Markets Tax Credits authority which will enable Finance New Mexico to generate approximately $35 million in capital that it will lend directly to qualified businesses in low-income areas.
The NMFA will operate the NMTC program on behalf of Finance New Mexico under the guidance of its adopted New Markets Tax Credit Program Policies and Procedures, Economic Impact Policies and Lending and Credit Policies. The NMTC program was established primarily to provide greater access to financing for new, expanding or relocating businesses in underserved areas across the country. NMFA is targeting the use of its allocation of tax credit incentives to add to existing statewide economic development initiatives.
Eligible employers must be located in a rural area and be approved for the JTIP program. Employers receive a credit of 6.25% of the first $16,000 in wages. If the job is located in a Tier 1 community (< 15,000 in population), the employer may take the credit for four consecutive years. Businesses located in a Tier 2 community (> 15,000 in population) may take the credit for two consecutive years. If the amount of credit exceeds the businesses tax liability, the excess may be carried forward for up to three years. Rural New Mexico is defined as any part of the state other than Los Alamos, Albuquerque, Rio Rancho, Las Cruces and Santa Fe – and a 10 mile zone around municipalities.
Businesses may take a credit on research expenditures of 4% (8% in rural areas). Qualified expenditures may include land, buildings, equipment, computer software and upgrades, consultants, technical literature, test materials, 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% may be applied against state income tax if base payroll expenses will be increased by at least $75,000 per $1,000,000 of expenditures claimed.
A taxpayer who files a New Mexico income tax return and who is a “qualified investor” may take a tax credit of up to $25,000 (25% of a qualified investment of not more than $100,000). For instructions on applying, click here.
Angel Investment Tax Credit Investment Form
To be completed by the investor, eligible for the angel investment tax credit.
Download claim form
Angel Investment Tax Credit Application Form
To be completed by the small business who is recipient of the qualified cash investment in equity eligible for the angel investment tax credit.
Download claim form
Angel Investment Tax Credit Application Form – Investing Entity other than Accredited Investor.
Download claim form
The City of Clovis has cash assistance available for qualifying businesses for furthering or implementing economic development plans and projects including the purchase of land, buldings, and infrastructure defined by the local economic development plan. A combination of low interest loans, subsidized land costs, and performance based grants are negotiated on a case-by-case basis.
Clovis Community College- Industrial Technology Program Clovis Community College (CCC) will design training programs specific to an employer’s needs. The training can be conducted on campus or on-site and can vary in length, depending on need. The training is available at low cost, and often with incentives, at no cost to the employer.
Clovis Community College provides opportunities for learning that accommodate students seeking technical training and higher education. CCC has a history of distinction in the level of accessibility, quality, and affordability. A variety of associate degrees, technical-vocational certificates, university parallel (transfer) programs, and individual courses for enrichment are provided on campus and through distance education. The education available at CCC is an excellent foundation to continuing academic studies.
What does the Industrial Program offer? CCC’s Industrial Technology program teaches the fundamentals of the operation and maintenance of complex industrial systems. Industrial technology students are exposed to a wide variety of maintenance and operations coursework, providing students with a unique blend of training for a high wage and in-demand field. This program provides two areas of concentration constructed around industry demands. These areas of concentration are Plant Operations and Equipment and Wind Energy. Associate of Applied Science degrees are available in each concentration. If students choose to complete only the Program and Related Requirements of a particular track, they are eligible for a Certificate of Completion in the respective concentration. In addition to this, five Letters of Qualification can be earned by taking a subset of classes in a specialty area. For more information click here.
The City of Clovis and Curry County can issue Industrial Revenue Bonds (IRB) for the expansion and relocation of commercial and industrial projects. Significant property tax and compensating tax exemptions can occur through the use of an 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 the end of the lease, purchase the facility from the issuer for a nominal amount.
IRBs generally range from 50% for 20 years to 75% for 30 years.
The benefit of remaining property tax exemptions can be passed on to the new owner or flow through a lease in event of a sale or lease to a new user, under certain qualifying conditions. City council must vote to induce an IRB, and the community does not lend its credit to an IRB. The company must secure its own purchase of IRBs or the company can purchase its own IRB.
Assume a company invests $10 million in Clovis: $5 million in land and building, and $5 million in equipment purchased out of state:
|Property Tax Exemption on Land and Building||($5,000,000/3) x 0.045951||$76,585|
|Nominal value for 20 years:||$76,585 x 20 years||$1,531,700|
|Property Tax Exemption on Equipment (first year)||($5,000,000/3) x 0.045951||$76,585|
|Nominal value for 7 years||(Depreciated value/3) x 0.045951||$306,340|
|Tax Exemption on Equipment||$5,000,000 x 0.05||$250,000|
New Mexico communities can choose to abate all property taxes on a plant location or expansion up to 30 years, subject to the discretion of the local community. This is not a tax freeze but a true abatement on building, land and equipment. While state law allows this incentive, each city or county government controls this tool. At the end of the abatement period, the company will be faced with paying relatively low property taxes as New Mexico property taxes are the 49th lowest in the nation.
The City of Clovis has a 1/8 gross receipt tax, the proceeds of which are used for economic development incentives, including infrastructure development.
(Referred to as “IRB-Lite”), new business facilities may be qualified to receive a property tax exemption on commercial personal property (equipment) up to 20 years.
The Clovis area and the State of New Mexico provide aggressive incentives to reduce the overall cost of business. Some of the most significant incentive programs include:
- Double Weighted Sales Option
- Technology Jos Tax Credit
- Manufacturing Investment Tax Credit
- Gross Receipts Tax Exemptions (IRB's)
- Property Tax Abatements (IRB's)
- High Wage Jobs Tax Credit
- Job Training Incentive Program
- Interstate WATS Tax Exemption
- Out-of-State Tuition Waiver/Lottery Scholarships
Companies can elect to double weight the sales, in which a corporation takes the New Mexico portion of plant, payroll, sales and sales (counting the sales twice) and uses a divisor of four.
Qualified New Mexico facilities may take a credit equal to 4% (8% 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% (8% total urban, 16% 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. Assume a company plans to spend $10,000,000 in qualified expenditures:
|Technology Jobs Tax Credit||Calculation||Value|
|If payroll is less than $750,000, tax credit is 4%||$10,000,000 x 0.04||400,000|
|If payroll is over $750,000, tax credit is 8%||$10,000,000 x 0.08||800,000|
*Expenditures may include land, buildings, equipment, computer software and upgrades, consultants, technical books and manuals, test materials, costs associated with patents, payroll, and labor.
New Mexico tax law provides for a credit equal to five 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 or gross receipts tax or withholding tax due. Gross receipts tax acts very much like a sales tax; the city rate is 6.0625 percent. Compensating, or use, tax applies to purchases made out of state and totals 5.0 percent. The credit is limited to 85% 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. Criteria Must meet criteria for new jobs added:
- For Claims $0 - $30,000,000: 1 new worker employed for each $500,000 in qualified equipment
- For Claims Over $30,000,000: 1 new worker employed for each $1 million in qualified equipment
Credit is available through 6/30/2011.
The High Wage Jobs Tax Credit provides businesses with a tax credit equal to ten percent of the combined value of salaries and benefits for each net new job paying a salary of at east $40,000 per year in the Albuquerque metropolitan area and other communities larger than 40,000 in population. The value of the credit cannot exceed $12,000 per job. Qualified employers can take the credit for four years. The credit can be applied against the modified combined tax liability of a taxpayer, including the state portion of gross receipts tax, compensating tax and withholding tax. Any excess credit will be refunded to the taxpayer. Eligible jobs are those created by qualifed employers after July 1, 2004 and prior to July 1, 2009. In New Mexico, companies located in communities smaller than 40,000 persons, are eligible for a tax credit equal to ten percent of the wages and benefits paid for each new job created paying at least $28,000 annually.
The New Mexico Job Training Incentive Program is a highly flexible state program to provide pre-employment (classroom) and on-the-job training. Customized training may be provided by post-secondary educational institutions, company trainers, or outside trainers. The state will reimburse
- Up to 50% of trainees' wages up to 1,040 hours in urban areas
- 100% of classroom training costs provided by New Mexico post-secondary education institutions (e.g. Albuquerque Technical Vocational Institute)
- 50% of trainees' travel and per diem for out-of-state training
- 50% of company or outside trainers' travel and per diem when using out-of-state trainers
- Maximum wage reimbursement is tied to hours required to learn the job and the hourly wage
- Applicants must be New Mexico residents for one year
- Trainees must be guaranteed full-time year-round employment upon successful completion of training
- "Hands-on" or production jobs qualify; supervisory, salaried or professional jobs do not
- Re-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
- Reimbursement is subject to availability of funds and approval by the Industrial Development Board
Assume a company hires three types of workers at different wage rates and different training time schedules.
The Legislative Lottery Scholarship helps provide tuition for New Mexico high school graduates who want to attend a New Mexico Public College or University. The scholarship pays 100% of tuition for eight consecutive semesters of eligibility beginning with the second semester of college enrollment. As of Fall 2007, the minimum requirements are:
- Be a New Mexico resident;
- Graduate from a New Mexico public high school, an accredited private high school recognized by the Public Education Department, or have obtained a New Mexico GED;
- Enroll full-time at an eligible New Mexico public college or university in the first regular semester immediately following high school graduation or obtaining a GED; and
- Obtain and maintain at least a 2.5 GPA.
Clear skies, mild weather, world-renowned research, a growing pool of investors, and an expanding aerospace industry make New Mexico an ideal location for the next generation of aerospace entrepreneurs. Aircraft Maintenance or Remodeling Tax Deduction Receipts from maintaining, refurbishing, remodeling or otherwise modifying a commercial or military carrier (aircraft) over 10,000 pounds gross landing weight may be deducted from gross receipts. Aircraft Manufacturing Tax Deduction Receipts of an aircraft manufacturer or affiliate from selling aircraft or aircraft parts, or from selling services performed on aircraft or aircraft components or from selling aircraft flight support, pilot training or maintenance training services may be deducted from gross receipts. Research and Development Tax Deduction Aerospace services are the research and development services sold or for resale to an organization for resale by the organization to the U.S. Air Force. When R&D services are sold to another corporation for resale to the Air Force, the seller’s receipts are deductible. If the R&D services are sold to an intermediary for resale to a corporation for resale to the Air Force, those receipts are also deductible. Space Gross Receipts Tax Deductions There are four separate deductions connected with the operation of a spaceport in New Mexico. Businesses may deduct the receipts from launching, operating or recovering space vehicles or payloads; from preparing a payload in New Mexico; from operating a spaceport in New Mexico; and from the provision of research, development, testing and evaluation services for the United States Air Force operationally responsive space program.
Gross receipts tax deductions are available for:
- Feed for livestock, including the baling wire or twine used to contain the feed, fish raised for human consumption, poultry or animals raised for hides or pelts and seeds, roots, bulbs, plants, soil conditioners, fertilizers, insecticides, germicides, insects, fungicides, weedicides and water for irrigation and
- Warehousing, threshing, cleaning, harvesting, growing, cultivating or processing agricultural products including ginning cotton, and testing and transporting milk. Gross receipts tax exemptions are permitted for feeding, pasturing, penning, handling or training livestock and, for agribusinesses, selling livestock, live poultry and unprocessed agricultural products, hides and pelts.
Advanced Energy Tax Credits Advanced energy facilities, such as solar thermal electric generating, advanced technology coal generating or recycled energy, may qualify for up to $60 million in credits. The credit is equal to 6 percent of facility development and construction expenditures. Alternative Energy Product Manufacturers Tax Credit Manufacturers of electric or hybrid vehicles, fuel cell systems, renewable energy systems, IGCC systems, and carbon sequestration equipment may receive for a tax credit of up to 5 percent of the their capital expenses. The credit may be applied against gross receipts, compensating, or withholding tax and may be carried forward for up to 5 years. Biodiesel Blending Facility Tax Credit A business which installs biodiesel blending equipment owned by the rack operator for the purpose of establishing or expanding a facility to produce blended biodiesel fuel is eligible to claim a credit against gross receipts tax and compensating tax.. The credit is equal to 30% of the purchase cost of the equipment and the cost of installing that equipment. The credit cannot exceed $50,000 with respect to equipment installed at any one facility nor can the claims exceed $1,000,000 per calendar year. Blended Biodiesel Fuel Tax Credit Provides a tax credit on blended biodiesel fuels (minimum of 2 percent biodiesel). Gross receipts and compensating tax may be deducted for installing biodiesel blending infrastructure up to $50,000 per facility or $1 million per year. Hybrid Vehicle Tax Exemption Purchasers of hybrid gasoline-electric vehicles with an EPA fuel economy rating of 27.5 miles per gallon or better can save between $600 and $1,000 in-state tax savings in addition to the federal tax deduction. Renewable Energy Production Tax Credit Each renewable energy generator of one megawatt or more may earn an income tax credit (personal or corporate) of 2.7 cents (on average) per kilowatt-hour for the first four hundred thousand megawatt-hours (=400,000,000 kilowatts) of electricity produced for ten consecutive years, beginning with the first year of production. New Mexico’s is fully refundable. Solar Energy Systems Gross Receipts Tax Exemption Power produced from solar electric and solar thermal energy systems is exempt from gross receipts tax when the generated power is used on-site. Solar Market Development Income Tax Credit Augments the federal solar tax credit by reimbursing up to 30 percent of the cost of a solar photovoltaic or solar thermal system. Solar system owners can receive up to $2,000 federal solar tax credits and up to $9,000 in state solar tax credits. Sustainable Building Tax Credit This credit provides income tax credits for building energy-efficient, sustainable commercial, institutional and residential buildings. Homes must be 40 percent more energy efficient than the standard building code. Commercial and institutional buildings must be 50 percent more energy efficient