New Mexico R&D Tax Credits

New Mexico provides an application for the Technology Jobs and Research and Development Tax Credit using form RPD-41385. Once the application is approved, the credits are claimed using for RPD-41386. Pass-through entities can also take advantage of these credits using Form RPD-41387.

A taxpayer conducting qualified research at a qualified facility and making qualified expenditures is eligible 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. See the instructions for important definitions and required attachments. To apply for the Technology Jobs and Research and Development Tax Credit, a taxpayer must have qualified expenditures made on or after January 1, 2015.

The credit is equal to 5% of qualified research expenses (or 10% in located in a rural area). The credit is equal to the sum amount of all gross receipts taxes, and 50% of withholding taxes paid on behalf of employees and owners who have no more than 5% ownership in the business. R&D Small Business Tax Credit Offsets 50% of tax liability for that year. To qualify, the business (taxpayers) cannot have employed more than 50 employees, and must not have qualified research expenses of more than $5 Million.

Learn more about New Mexico's R&D Tax Credit from the New Mexico Taxation & Revenue department.

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R&D Tax Credit Available:

Yes

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Eligible Entities:

C-Corporations, S-Corporations, LLCs, Partnerships

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Deadline for Tax Filing:

Application is due within one year following the end of the calendar year in which the qualified expenditure was made.

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Data Required to Compute Credit:

Claim Period New Mexico Qualified R&D Expenses (QREs)

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What Information is needed?

Expense summary and description of qualified expenditures

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Credit Carryforward:

3 Years

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The R&D tax credit equals:

Basic Technology Jobs Tax Credit is 5% of Qualified New Mexico Expenditures (or 10% if in a rural area)

Additional Technology Jobs Tax Credit is 5% of Qualified New Mexico Expenditures (or 10% if in a rural area)

Specific Items to Note:

The Basic Tax Credit may be applied against the taxpayer’s compensating tax, gross receipts tax, or withholding 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 gross receipts tax, compensating tax, and withholding tax due for that reporting period.

The Additional Tax Credit may be applied against the taxpayer’s personal or corporate income tax. 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. A husband and wife may each claim only one-half the additional credit. A pass-through entity approved for additional credit may pass the additional credit to its owners, partners, or members using Form RPD-4136.

Qualified Expenditures means any expenditure or allocated portion of an expenditure connected to qualified research at a qualified facility. Such expenditures include the following:

• Depletable land and rent paid or incurred for land  Improvements;
• Allowable amounts paid or incurred to operate or maintain a facility;
• Buildings;
• Equipment;
• Computer software & Computer software upgrades;
• Consultants and contractors performing work in New Mexico;
• Payroll;
• Technical books and manuals; and
• Test materials

The Qualified Expenditures must be within a Qualified Facility means a factory, mill, plant, refinery, warehouse, dairy, feedlot, building, or complex of buildings located in New Mexico at which qualified research is conducted. These include the land on which the facility is located and all machinery, equipment and other real and tangible personal property located at or within the facility and used in connection with the operation of the facility.

Qualified research and development small businesses may be entitled to a refund of all or a portion of approved additional technology jobs and research and development tax credit.  The small business must have fewer than 50 employees, total QREs.

Every application is reviewed by an auditor prior to approval.