New Mexico Technology Jobs and R&D Tax Credit
New Mexico allows taxpayers conducting qualified research in New Mexico and making qualified expenditures to claim the basic technology jobs and research and development tax credit. The taxpayer is also entitled to an additional credit if annual payroll expenses increase by $75,000 over base payroll for every $1,000,000 in qualified expenditures claimed by the taxpayer in a tax year in the same claim. A taxpayer may apply for approval of a basic credit within one year following the end of the reporting period in which the qualified expenditure was made.
The Basic Tax Credit may be applied against the taxpayer’s compensating tax, withholding tax or gross receipts tax (excluding local option gross receipts tax), due to the state of New Mexico. No taxpayer may claim an amount of approved basic credit for any reporting period that exceeds the sum of the taxpayer’s compensating tax, withholding tax and gross receipts tax (excluding local option gross receipts tax) due for that reporting period. Approved basic credit may be carried forward for a period of up to three years from the date of the original claim.
The Additional Tax Credit may be applied against the taxpayer’s personal or corporate income tax. Except for qualified research and development small businesses, no taxpayer may claim an amount of additional credit for any reporting period that exceeds the amount of the taxpayer’s personal or corporate income tax due for that reporting period.
Qualified research and development small businesses may claim a refund of all or a portion of approved additional credit. If the total qualified expenditures for the tax year for which the claim is made is:
- less than $3,000,000, the excess additional credit shall be refunded to the taxpayer;
- greater than or equal to $3,000,000 and less than $4,000,000, two-thirds of the excess additional credit shall be refunded, and
- greater than or equal to $4,000,000 and less than or equal to $5,000,000, one-third of the excess additional credit shall be refunded.
Any amount of the additional credit that isn’t claimed against the taxpayer’s income tax or corporate tax may be carried forward for up to three years from the date of the original claim.
The credit amounts to 5% of Qualified Expenditures or 10% if in a rural area so a company with $250,000 of qualified expenditures is entitled to a credit of $12,500 or $25,000 if in a rural area. A rural area means any area within the state other than the state fairgrounds, an incorporated municipality with a population of 30,000 or more and any area within three miles of the external boundaries.
How to obtain the credit?
Taxpayers must file Form RPD – 41385 to apply for the credit.
Find out if you qualify for the R&D tax credit
SELL YOUR NOL’s AND R&D CREDITS
If your company hasn’t considered the R&D credit in the past because you have net operating losses (NOLs) and could not utilize the credit contact us today to find out which states allow you to sell your credits and losses for up to 95 cents on the dollar. Also, qualified start-up companies can now take a credit on their payroll taxes for their R&D credit, allowing your company to utilize the R&D credit immediately, even if your company does not have taxable income.
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