NM Incentives | Finance, Loans, IRB, Workforce Development

A comprehensive list of New Mexico financial aid, loans, grants, abatements, workforce development, exemptions, funds & capital investment opportunities.


https://businessfacilities.com/2016/03/nm-incentives-and-workforce-development-guide/
A comprehensive list of New Mexico financial aid, loans, grants, abatements, workforce development, exemptions, funds & capital investment opportunities.
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New Mexico Incentives and Workforce Development Guide

NM Incentives | Finance, Loans, IRB, Workforce Development

For a list of New Mexico economic development agencies that can help with the site selection process, visit our Online Site Seekers’ Guide.

 

FINANCING

Local Economic Development Act (LEDA) Capital Outlay Funds: The New Mexico Economic Development Department (EDD) is granted authority to administer Local Economic Development Act capital outlay (LEDA CO) funds to local governments (county, municipality or tribal entity) to help stimulate economic development efforts pursuant to the State Wide Economic Development Finance Act. Funding of grants is strictly based on the receipt of capital outlay funds appropriated by the New Mexico Legislature. LEDA funds are provided on a reimbursable basis only. In 2015 EDD received an appropriation of $50 million in LEDA CO.

Collateral Support Program (CSPP): The New Mexico Finance Authority is the administrator of $13.2 million in Small Business Collateral Support Participation Program funds through an MOU with the Economic Development Department. These funds are dedicated to help finance credit-worthy small businesses, with 750 employees or less, leverage private lending when they are unable to obtain the capital required to expand and create jobs. The CSPP provides funding by the U.S. Department of Treasury under the State Small Business Credit Initiative (SSBCI), authorized under the Small Business Jobs Act of 2010.

FUNDIT: Created to assist communities in accessing financing from a group of agencies simultaneously. This collaboration saves time and duplication, improves the effectiveness of project review and support, and ensures strategic investments with public resources.

Eligible projects include:

  • Business development such as incubators, industrial parks
  • Community development such as feasibility studies, comprehensive plans
  • Infrastructure development such as capacity increase, update or replace current
  • Housing where there are critical shortages
  • Downtown revitalization

Local Government Planning Fund: Formerly known as the Water and Wastewater Planning Fund, the Local Government Planning Fund is funded and administered through the New Mexico Finance Authority (NMFA). It provides up-front capital necessary to allow for proper planning of vital water and wastewater projects. The 2005 and 2012 Legislatures broadened project eligibility to include master plans, conservation plans, economic development plans, infrastructure plans and energy efficiency audits. Additionally, the 2012 Legislature eliminated the requirement to repay the fund if the project moves forward and the funding is now delivered as 100% grant. Grants are determined on a sliding scale.

 

TAX INCENTIVES

New Markets Tax Credits (NMTC): The Statewide Economic Development Finance Act provides the New Mexico Finance Authority (NMFA) with broad authority to operate finance programs that stimulate economic development including the power to form, operate, own or co-own qualified Community Development Entities (CDEs) for the purposes of participating in the New Markets Tax Credit Program. New Mexico currently has a New Markets Tax Credits allocation of $45 million for urban areas and $22 million for rural areas.

The NMTC program was established primarily to provide greater access to financing for new, expanding or relocating businesses in underserved areas across the country. Projects eligible for NMTC funding must be located in qualified Census tracts. These tracts are generally located in “highly distressed” census tracts (75% of New Mexico’s total allocation must be invested in qualified census tracts).

Alternative Energy Product Manufacturer’s Tax CreditManufacturers of certain alternative energy products may receive a tax credit not to exceed 5% of qualified expenditures for purchase of manufacturing equipment used in the manufacturing operation. This credit is designed to stimulate the development of new alternative energy manufacturing facilities.

Angel Investment Credit: An incentive intended to encourage private investment in New Mexico technology-intensive companies and manufacturers. A taxpayer who files a New Mexico income tax return and who is a “qualified investor” may take a tax credit of up to $62,500 (25% of a qualified investment) for an investment made in each of up to five New Mexico companies that are engaging in qualified research, as defined by the Internal Revenue Code, or manufacturing. The taxpayer may claim the angel investment credit for one qualified investment per investment round. Any portion of the tax credit remaining unused at the end of the taxpayer’s taxable year may be carried forward for five consecutive years.

Beer & Wine Producers’ Preferential Tax Rate: Microbreweries producing less than 5,000 barrels of beer annually and small wineries producing less than 560,000 liters of wine per year qualify for a preferential tax rate. The Liquor Excise Tax Act imposes taxes on beer, wine and spirituous liquors. The basic tax rate for wine is 45 cents per liter. Wine produced by a small vintner carries a tax of 10 cents per liter on the first 80,000 liters and 20 cents on production over that level up to 560,000 liters. The basic tax rate for beer produced by a brewery is 41 cents; beer produced by a microbrewery (producing less than 5,000 barrels annually) is taxed at 8 cents per gallon.

Biodiesel Blending Facility Tax Credit: An operator of a refinery in New Mexico, any person who blends special fuel in New Mexico or the owner of special fuel stored at a pipeline terminal in New Mexico, who installs biodiesel blending equipment for the purpose of establishing or expanding in a facility to produce blended biodiesel fuel is eligible to claim a credit against gross receipts tax or compensating tax. A certificate of eligibility must be obtained from the Energy, Minerals, and Natural Resources Department to apply for this credit. The credit is equal to 30% of the purchase cost of the equipment plus 30% of the cost of installing that equipment. The credit cannot exceed $50,000 with respect to equipment installed at any one facility. The credit may be applied against the taxpayer’s gross receipts tax liability or compensating tax liability. The credit may be carried forward for four years from the date of the certificate of eligibility.

Biomass-Related Equipment & Materials DeductionThe value of equipment such as a boiler, turbine-generator, storage facility, feedstock processor, interconnection transformer, or biomass material used for bio-power, bio-fuels, or bio-based products may be deducted in computing the compensating tax due.

Financial Management Tax Credit: Receipts from fees received for performing management or investment advisory services for a related mutual fund, hedge fund, or real estate investment trust may be deducted from gross receipts.

High Wage Jobs Tax Credit: A taxpayer who is an eligible employer may apply for and receive a tax credit for each new high-wage economic-base job. The credit amount equals 10% of the wages and benefits paid for each new economic-base job created.

Qualified jobs: 

  • Pays at least $40,000/year in a community with a population of less than 60,000
  • Pays at least $60,000/year in a community with a population of 60,000 or more
  • Occupied for at least 48 weeks by the employee

Qualified employers: 

  • Are growing with employment greater than the previous year; and
  • Made more than 50% of its sales to persons outside New Mexico during the most recent 12 months of the employer’s modified combined tax liability reporting periods ending prior to claiming this credit; or
  • Are eligible for the Job Training Incentive Program

Qualified employers can take the credit for four years. The credit may only be claimed for up to one year after the end of the four qualifying periods. The credit can be applied to the state portion of the gross receipts tax, compensating tax, and withholding tax. Any excess credit will be refunded to the taxpayer. The credit shall not exceed $12,000 per year, per job.

Qualified employees: 

  • Must be a resident of New Mexico
  • Cannot be a relative of the employer or own more than 50% of the company

Investment Tax Credit for Manufacturers: Manufacturers may take a credit against gross receipts, compensating or withholding taxes equal to 5.125% of the value of qualified equipment when the following employment conditions are met:

  • For every $500,000 of equipment, 1 employee must be added up to $30 million; and
  • For amounts exceeding $30 million, 1 employee must be added for each $1 million of equipment

The credit may (also) be claimed for equipment acquired under an IRB. This is a double benefit because no gross receipts or compensating tax was paid on the purchase or importation of the equipment.

The manufacturer simply reduces its tax payment to the state (by as much as 85% per reporting period) until the amount of investment credit is exhausted. There also are provisions for issuing a refund when the credit balance falls under $500,000. The credit does not apply against local gross receipts taxes.

Locomotive Fuel Gross Receipts & Compensating Tax Exemption: Receipts from the sale of fuel to a common carrier to be loaded or used in a locomotive engine may be deducted from the gross receipts, and the value of fuel sold to a common carrier to be loaded or used in a locomotive engine may be deducted in computing the compensating tax.

“Locomotive engine” is defined as a wheeled vehicle consisting of a self-propelled engine that is used to draw trains along railway tracks. To be eligible, the fuel sold must be used or loaded by a common carrier that:

  1. After July 1, 2011, made a capital investment of $100 million or more in new construction or renovations at the railroad locomotive refueling facility in which the fuel is loaded or used; or
  2. On or after July 1, 2012, made a capital investment of $50 million or more in new railroad infrastructure improvements, including railroad facilities, track, signals, and supporting railroad network, located in New Mexico; provided that the new railroad infrastructure improvements are not required by a regulatory agency to correct problems, such as regular or preventive maintenance, specifically identified by that agency as requiring necessary corrective action.

Renewable Energy Production Tax Credit: A corporate or personal taxpayer who owns a qualified energy generator is eligible for a tax credit in an amount equal to 1 cent per kilowatt hour of electricity produced by the qualified energy generator using a qualified energy resource in the tax year. A variable rate of credit is added for electricity produced using solar energy. The rate starts at 1.5 cents in the 1st year of operation and increases in increments of .5 cent each of the next five years, to a maximum of 4 cents, and then will decline by .5 cent per year in the next four years to 2 cents in the 10th year of operation. The 1 cent per kilowatt hour rate applies for all other qualified energy generation facilities. The facility must generate a minimum of 1 megawatt. The total amount of electricity that can qualify for the corporate and individual income tax credits is 2 million megawatts for wind and biomass with an additional 500,000 megawatt hours allowed for solar-generated power.

Rural Jobs Tax CreditThis credit can be applied to taxes due on (state) gross receipts, corporate income or personal income tax. Rural New Mexico is defined as any part of the state other than Los Alamos County; certain municipalities: Albuquerque, Rio Rancho, Farmington, Las Cruces, Roswell, and Santa Fe; and a 10-mile zone around those select municipalities.

Company eligibility:

  • Companies that manufacture or produce a product in New Mexico
  • Non-retail service companies that export a substantial percentage of services out of state (50% or more revenues and/or customer base)
  • Certain green industries

The rural area is divided into two tiers:

  • Tier 2 = Non-metro area municipalities that exceed 15,000 in population: Alamogordo, Carlsbad, Clovis, Gallup, and Hobbs
  • Tier 1 = Everywhere else in a rural area

The maximum tax credit amount with respect to each qualifying job is equal to:

  • Tier 1: 25% of the first $16,000 in wages paid for the qualifying job (may be taken at $1,000 per year for four years)
  • Tier 2: 12.5% of the first $16,000 in wages paid for the qualifying job (may be taken at $1,000 per year for two years)

A qualifying job is a job filled by an eligible employee for 48 weeks in a 12-month qualifying period. The credit may be carried forward for up to 3 years.

Rural Software Development & Gross Receipts Tax Deduction: Receipts from the sale of software development services may be deducted from gross receipts tax when the service is performed in a rural area. Software development services include custom software design and development and web site design and development, but does not include software implementation or support services. A rural area is defined as any not within the municipal boundaries of the cities of Albuquerque, Las Cruces, Rio Rancho and Santa Fe are not eligible for this deduction.

Space Gross Receipts Tax Deductions: There are four separate deductions connected with the operation of a spaceport in New Mexico.

  1. Receipts from launching, operating or recovering space vehicles or payloads
  2. Receipts from preparing a payload in New Mexico
  3. Receipts from operating a spaceport in New Mexico
  4. Receipts from the provision of research, development, testing, and evaluation services for the United States Air Force Operationally Responsive Space Program

“Space” is defined as any location beyond altitudes of 60,000 feet above mean sea level. “Payload” means a system, subsystem or other mechanical structure designed and constructed to perform a function in space. “Space operations” is defined as the process of commanding and controlling payloads in space. “Spaceport” is defined as the installation and related facilities used for the launching, landing, operating, recovering, servicing and monitoring of vehicles capable of entering or returning from space.

Technology Jobs and R&D Tax CreditA taxpayer that employs no more than 50 employees, has qualified expenditures of no more than $5 million and who conducts qualified research and development at a facility in New Mexico is allowed a basic tax credit equal to 5% of qualified expenditures, and an additional 5% credit toward income tax liability by raising its in-state payroll $75,000 for every $1 million in qualified expenditures claimed. The tax credit doubles for expenditures in facilities located in rural New Mexico (as defined for this tax credit as anywhere outside a three-mile radius of an incorporated municipality with a population of 30,000 or more. The taxpayer claims the credit within one year following the end of the year in which the expenditure was made. The credit amount is applied against the taxpayer’s state gross receipts, compensating and withholding liabilities until the credit is exhausted.

Texas/Mexico Border Residents’ Tax ExemptionNon-resident employees may allocate their compensation to their home state. Since Texas does not have a personal income tax, Texas residents working at the New Mexico enterprise will not have to pay any state income tax on their compensation from the enterprise. The enterprise must be in the manufacturing business, physically located within 20 miles of the Mexican border, have at least five employees who are New Mexico residents and not be receiving Job Training Incentive Program funds.

Single Sales Factor: Beginning January 1, 2014, New Mexico will begin phasing in a single sales factor apportionment methodology for corporations whose principal business activity is manufacturing. For the purposes of apportioning income, “manufacturing” excludes construction, farming, power generation, and processing natural resources including hydrocarbons. In addition, in taxable years that begin on or after January 1, 2015, corporate headquarters operations may elect to have business income apportioned to New Mexico subject to a single sales factor apportionment methodology.

Five-Year Policy Changes:

YearAppointment
2014Double-Weighted Sales
2015Triple-Weighted Sales
201670% Sales
201780% Sales
2018Single Sales Factor

 

 

WORKFORCE DEVELOPMENT

Job Training Incentive Program (JTIP): Formerly known as the Industrial Development Training Program, JTIP funds classroom and on-the-job training for newly-created jobs in expanding or relocating businesses for up to six months. The program reimburses 50% to 75% of employee wages. Custom training at a New Mexico public educational institution may also be reimbursed. Businesses eligible for consideration include:

  • Companies that manufacture or produce a product in New Mexico
  • Non-retail service companies that export a substantial percentage of services out of state (50% or more of revenues and/or customer base). Customer support centers and product testing laboratories are two examples of businesses that have qualified in this category
  • Certain green industries

The company must be financially sound and must be creating new jobs as a result of expansion or relocation to the state of New Mexico. Businesses in certain industries are not eligible. Some examples are agriculture, construction, extractive industries, gambling, healthcare and retail.

 

ADDITIONAL RESOURCES

Business Retention & Expansion Program (BRE): The Economic Development Department serves New Mexico businesses by providing assistance in a number of areas including workforce training, advocacy to resolve regulatory and permitting issues, finance development, export assistance, access to tax incentives, and our Business Resource Center. We deliver many of these services through the strong relationships we maintain with the statewide business community.

EDD’s Business Retention & Expansion Program is managed by the Community, Business & Rural Development Team. Team members have offices in the regions they serve and they maintain relationships with the economic-base businesses in those regions. The BRE Program represents those relationships and it begins with a visit and survey conducted informally with a company representative. The purpose of the survey is to document and address any issues the business may be experiencing; determine where the company purchases services and supplies in order to match the company with other New Mexico businesses; determine if the company has any plans to expand; and to use the opportunity to inform the company of state incentives and services.

After the initial visit and survey the Team member remains in regular contact with the company, calling on them periodically to provide any needed assistance such as completing a Job Training Incentive Program application for new hires.

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