New Mexico Technology Jobs and Research and Development Tax Credit

Program overview

New Mexico structures its incentive as a basic credit on qualified research expenditures plus an additional credit that is unlocked only when the business increases its New Mexico payroll. Rates double for expenditures in rural areas outside the state's metropolitan corridors. Small businesses may receive a refund of the basic credit in cash, and the credit may be applied against gross receipts tax, compensating tax and withholding tax as well as income tax, which is unusually flexible.

Eligibility

Taxpayers conducting qualified research at a facility in New Mexico, with the additional credit requiring an increase in annual New Mexico payroll relative to a base year.

Benefits

Applies against gross receipts, compensating, withholding and income tax; refundable in cash for qualifying small businesses.

New Mexico IDR questions

What an examiner is likely to ask about this credit. S1–S7 apply to every state claim; the rest come from this program's own rules.

1. S1Confirm the research was physically performed within New Mexico.
2. S2Provide the New Mexico qualified research expense calculation and base amount.
3. S3Reconcile New Mexico expenses to the federal Form 6765.
4. S4Show how wages and supplies were apportioned between New Mexico and other locations.
5. S5Provide the New Mexico return and credit schedule for each year claimed.
6. S6Show the carryforward schedule for unused New Mexico credits.
7. S7Confirm the entity claiming the credit is the entity subject to New Mexico tax.
8. NM-1Show the New Mexico refund eligibility tests (such as small business status) were met in each year refunded.

Draft questions for illustration, reviewed by a specialist before any engagement.