NMSS - Incentives: Industry Specific Incentives

Incentives: Technology & Electronics

shawna — Thu, 25 May 2006 11:01:25 -0600

Technology Incentives

Research & Development Tax Deduction
Rural Software Tax Deduction

Also see these Across the Board Incentives
Technology Jobs Tax Credit
Research & Development Small Business Tax Credit

For more information or a free custom analysis of tax incentives for your company, call 800-226-2935 or email us .

Research & Development Gross Receipts Tax Deduction

To encourage the growth of research and development service companies, the state offers a gross receipts tax deduction for receipts from selling any service performed in New Mexico that is exported from the state to a buyer outside of New Mexico, even if the buyer has a New Mexico office or facility, as long as:

The product of the service is delivered to the buyer out-of-state; and,
The product of the service is initially used by the buyer for its intended purpose outside of New Mexico.

Rural Software and Web site Gross Receipts Tax Deduction

In an effort to stimulate new business development in rural New Mexico, the state legislature enacted a gross receipts tax deduction for software and Web site companies in rural New Mexico. The Metro New Mexico communities of Belen, Los Lunas and Estancia Valley qualify as rural for purposes of this tax deduction. The deduction:

covers receipts from selling custom software design and development and Web site design and development services.
applies to businesses located anywhere in the state except in a municipality with a population of more than 50,000.
applies only to businesses established after July 1, 2002.
doesn't apply to receipts from selling software implementation or support services
cannot be used by businesses with a second office in a metropolitan area.

Incentives: Energy

shawna — Thu, 11 May 2006 15:26:08 -0600

Incentives for Clean and Renewable Energy

Alternative Energy Product Manufacturers' Tax Credit
Renewable Energy Production Tax Credit
Wind Energy Equipment Gross Receipts Tax Deduction
Biomass-Related Equipment Tax Deduction
Energy Efficiency and Renewable Energy Bonding Act
The Efficient Use of Energy Act
Clean Energy Grants Program
Solar Thermal Electric Tax Credit
Solar Market Development Tax Credit
Sustainable Building Tax Credit
Hybrid Tax Exemption
PNM Customer Solar PV Program
Solar Energy Gross Receipts Tax Deduction

For more information or a free custom analysis of tax incentives for your company, call 800-226-2935 or email us.

Alternative Energy Product Manufacturers’ Tax Credit

This tax credit was created by the State of New Mexico to encourage the manufacturing of “advanced energy products.”

The Credit:

Provides for a credit equal to 5% of the value of purchases of qualified manufacturing equipment.
Equipment must be used directly and exclusively in a manufacturing operation that makes components or systems for alternative energy products.
Can be applied against compensating, gross receipts tax or withholding tax due.
Any remaining credit may be carried forward for up to five years.
Credit can be taken in addition to Manufacturing Investment Tax Credit.
There is no sunset.

Job Criteria:

1 new job per $500,000 of equipment purchased for first $30 million of equipment purchased.
1 new job per $1 million of equipment purchased in excess of $30 million.

Any remaining credit may be carried forward for up to five years.

Credit can be taken in addition to Manufacturing Investment Tax Credit.

Alternative Energy Product Definition:
Alternative energy products include the following products or components for them:

Motor vehicles powered by electricity, including hybrids,
Fuel cell systems,
Photovoltaic, solar thermal, wind, biomass and electric generation systems,
Some coal gasification combined cycle facilities,
Equipment to sequester carbon from combined cycle plants.

Renewable Energy Production Tax Credit

New Mexico provides a renewable energy production tax credit (frequently called a “PTC”) for qualifying producers of electricity from solar, wind and biomass energy.

Qualifying Facilities

One megawatt generating capacity

Sells electricity to “unrelated person”
Producing electricity on or before Jan. 1, 2018

The Credit

Corporate income tax
Five year carry-forward
WIND AND BIOMASS for first 400,000 megawatt hours for a taxable year:

One cent per kwh

SOLAR for the first 200,000 megawatt hours for a taxable year:

Increasing in .5 cent increments from 1.5 to 4 cents for the first six years
Decreasing in .5 cent increments from 3.5 cents to 2 cents in the last four years

Can be claimed for ten years from date of first generation
Can be claimed for an industrial revenue bond project.

Allocable to Owners of Pass-Through Entities

May be allocated more liberally than federal PTC

Credit claimants must collectively own at least 5% of facility.

Wind Energy Equipment Gross Receipts Tax Deduction

New Mexico provides a gross receipts tax deduction for receipts from selling wind turbines, nacelles, rotors, blades and “related equipment” to a state or federal government entity. The deduction is primarily intended to aid those constructing wind farms financed by an industrial revenue bond [link] when the actual purchaser is a New Mexico county or government. By Taxation and Revenue Department Ruling, the deduction does not apply to towers supporting wind turbines.

Biomass-Related Equipment Compensating Tax Deduction

The value of biomass-related equipment such as: boiler, gasifier, furnace, turbine-generator, storage facility, feedstock processing or drying equipment, feedstock trailer or interconnection transformer and biomass materials used for processing into biopower, biofuels or bio-based products may be deducted in computing the compensating tax due.

Energy Efficiency and Renewable Energy Bonding Act

Enables the state to issue bonds for $20 million in energy efficiency upgrades in state buildings and schools, pay back the bonds with energy savings, and use the net profits for renewable energy projects.

The Efficient Use of Energy Act

Requires public utilities to evaluate the potential for energy efficiency improvements and implement programs to increase energy efficiency.

Clean Energy Grants Program

Appropriates $3 million for grants for clean energy projects and hydrogen energy technology for municipalities and other eligible community, tribal, and state entities.

Solar Thermal Electric Tax Credit

Corporate tax credit. Along with the federal government, the state will credit up to 30% of solar photovoltaic or solar thermal system, up to $9,000.

Solar Market Development Tax Credit

Personal tax credit. Along with the federal governmnet, state will credit up to 30% of solar photovoltaic or solar thermal system, up to $9,000.

Sustainable Building Tax Credit

LEED-certified personal residences and businesses receive tax credits based on square footage of building and level of sustainability of building.

Hybrid Tax Exemption

Buy a hybrid-gasoline-electric vehicle that gets 17.5 mpg or more and save between $600 and $1,000.

PNM Customer Solar PV Program

Production incentive for installation of photovoltaics for commercial and residential customers.

Solar Energy Gross Receipts Tax Deduction

100% gross receipts tax exemption from sale and installation of solar energy systems.

Incentives: Operations Centers

shawna — Thu, 04 May 2006 11:32:53 -0600

Operations Center Incentives

Telemarketing Exemptions And Deduction

New Mexico is home to many teleservice centers. Receipts for WATS (wide area telephone service) and private communications services are deducted from gross receipts tax and interstate telecommunications gross receipts tax.

applies to companies that process phone orders and inquiries
prevents double taxation of interstate telecommunications by exempting taxes paid to other states or their political subdivisions, saving 4.25%
WATS service entitles a subscriber to either make or receive large volumes of communications to or from persons in specified geographical areas for a flat rate, which is calculated on the total duration of all such calls and the subscriber's selected geographic area.

Receipts from selling interstate telecommunications services that originate or terminate in New Mexico and are thus subject to the interstate telecommunications gross receipts tax, are exempt from the gross receipts tax.

Receipts from “wide area telephone service” and private telecommunications services are deductible from the interstate telecommunications gross receipts tax.

For more information or a free custom analysis of tax incentives for your company, call 800-226-2935 or email us .

Incentives: Digital Business

shawna — Thu, 04 May 2006 11:15:59 -0600

Digital Business Incentives

Film Production Tax Credit
Film Production Gross Receipts Tax Deduction
Film Investment Program
Web Hosting Gross Receipts Tax Deduction

For more information or a free custom analysis of tax incentives for your company, call 800-226-2935 or email us .

Film Production Incentives

With a long history of movie-making, New Mexico offers stunning locations, great filming weather, production stages, post-production facilities, and a skilled labor pool of technicians and actors. In 2002 New Mexico created three incentives to encourage film production.

The filmmaking industry consists of local firms who make commercials, as well as film production companies that come to New Mexico to make movies or television shows.

All three incentives require companies to register with the Film Division of the NM Economic Development Department. For details and directions on how to apply, see the New Mexico State Factbook, New Mexico Film Office, email film@nmfilm.com or call (800) 545-9871.

Film Production Income Tax Credit

The credit is based upon costs of producing films, videogames and national or regional advertising content, in film and digital formats,
For taxable years beginning before January 1, 2006, a personal or corporate income tax credit up to 15% of the total direct production costs incurred in New Mexico after January 1, 2002.
For tax years beginning January 1, 2006 through December 31, 2009, up to 25%.

For tax years beginning January 1, 2009, up to 20%

Credit applies to all industry accounting standard direct costs taxable by New Mexico.
Companies must register before production; credit applies after production in New Mexico has been completed for a tax year.

Film Production Gross Receipts Tax Deduction

This deduction primarily helps the in-state advertising industry by eliminating double taxation of amounts paid by qualified production companies to those selling or leasing production-related property and services.
Broad application to production costs, including payments for talent, management and labor, set construction, photography, facility and equipment rental among others.
A qualified production company executes nontaxable transaction certificates with its suppliers and vendors for tangible sale or leasing of personal property in New Mexico and services performed in New Mexico.
Suppliers then deduct their receipts from gross receipts tax.
Deduction offers a cost savings 6-8%.

Film Investment Program

The State Investment Council negotiates terms for each project.
Up to $15M can be invested in a New Mexico film private equity fund or film project.
Equity investment can be up to 2/3 of estimated total production costs.
Guaranteed debt investment can be up to 100% of estimated total production costs.
In case of guaranteed debt, equity is in lieu of interest, with final maturity between two and four years.
Film project must be filmed wholly or substantially in New Mexico.
Film must have a contract with a reputable distribution company.
Company must agree that a majority of the production crew in New Mexico will be New Mexico residents.
Company must post a completion bond that has been approved by the New Mexico film division or other acceptable guarantee.

Web Hosting Gross Receipts Tax Deduction

To encourage the development of clean, high technology businesses, New Mexico offers a gross receipts tax deduction for any company hosting Web sites in New Mexico.

Receipts from hosting Web sites may be deducted from gross receipts.
Applies to businesses that store information on computers attached to the Internet and that resell storage and interconnection capability.
Applies statewide.

Incentives: Manufacturing

shawna — Thu, 04 May 2006 10:33:06 -0600

Manufacturing Incentives

Manufacturing Investment Tax Credit
Double-Weighted Sales Factor Option

Manufacturing Investment Tax Credit

New Mexico provides a tax credit that can be claimed against a manufacturer’s gross receipts tax, compensating tax and withholding tax based on the value of qualifying manufacturing equipment placed in service in New Mexico when there is an increase in employment.

Qualifying Operations

combining or processing components or materials; includes genetic materials

excludes construction, farming or power generating equipment for regulated utilities.

Qualifying Equipment

essential machines, mechanisms, tools used directly and exclusively in manufacturing operation

not vehicles used off-site

not previously used in New Mexico

placed in manufacturing operation in New Mexico within prior year.

Credit

five percent of value of qualifying equipment

applicable against gross receipts tax, compensating tax, and withholding tax

partially refundable

unused credit carries forward.

Employment Requirements

one additional full-time equivalent employee for every $500,000 in value of qualifying equipment up to $30,000,000 in equipment.

One additional full-time equivalent employee for every $1,000,000 in value of qualifying equipment over $30,000,000 in value of equipment.

Can Be Used in Addition to Industrial Revenue Bond

Industrial Revenue Bonds allows purchase of manufacturing equipment free of gross receipts or compensating tax.

For more information or a free custom analysis of tax incentives for your company, call 800-226-2935 or email us .

Double-Weighted Sales Factor Option for Corporate Income Tax

This optional formula for calculating New Mexico income tax liability applies to businesses involved in manufacturing. The double-weighted sales factor provision is currently slated to sunset for tax years beginning on or after January 1, 2011.

Applies to businesses who combine or process components and materials, but does not include construction, farming, public utilities, or processing of natural resources including oil and gas.
It benefits businesess with significant investment in plant and payroll in New Mexico, but that deliver most of their product out of state.
If a company elects the double-weighted sales factor formula, it must use it for a minimum of three years.

Get more information

For more information or a free custom analysis of tax incentives for your company, call 800-226-2935 or email us .

Incentives: Aviation

shawna — Thu, 04 May 2006 10:15:38 -0600

Aviation & Aerospace Incentives

Aerospace Research & Development Tax Deduction
Aircraft Manufacturing Tax Deduction
Aircraft Refurbishing & Remodeling Tax Deduction
Spaceport Operations Exemption
Aerospace & Military Research and Testing Compensating Tax Deductions

For more information or a free custom analysis of tax incentives for your company, call 800-226-2935 or email us.

Aerospace Research & Development Tax Deduction

This incentive benefits New Mexico businesses that sell research and development services that are ultimately sold to the U.S. Air Force.

Provides deduction from gross receipts for receipts from selling R&D services to the U.S. Air Force, directly or indirectly.
Covers direct sales to the Air Force, sales to Phillips Laboratory at Kirtland Air Force base for resale to the Air Force, and sales through an intermediary for resale to Phillips Laboratory.

Beginning July 1, 2007--A deduction for receipts from the provision of research, development, testing, and evaluation services for the United States Air Force operationally responsive space program is also included.

Aircraft Manufacturing Tax Deduction

An aircraft manufacturer’s receipts from selling an aircraft are deductible from gross receipts; however, the deduction for the value of any trade-in must be taken before computing the manufacturer’s deduction. Fifty percent of the receipts from other sales of aircraft are deductible from gross receipts. Beginning July 1, 2007--The deduction was expanded to include selling services performed on aircraft or aircraft components or from selling aircraft flight support, pilot training, or maintentance training services.

Aircraft Refurbishing & Remodeling Tax Deduction

Receipts from performing the service of maintaining, refurbishing, remodeling or otherwise modifying a commercial or military carrier over ten thousand pounds gross landing weight may be deducted from gross receipts.

Spaceport Operations Deduction

This incentive benefits businesses involved in several aspect of space-related operations with deductions for:

receipts from launching, operating or recovering space vehicles or payloads in New Mexico
receipts from preparing payloads in New Mexico
receipts from operating a spaceport in New Mexico.

'Space' is defined as any location beyond altitudes of 60,000 feet above mean sea level.

“Spaceport” means an installation and related facilities used for launching, landing, operating, recovering, servicing and monitoring of vehicles capable of entering into or returning from space.

Aerospace & Military Research And Testing Compensating Tax Deductions

New Mexico offers deductions from its compensating tax (often referred to as a use tax) for use in aerospace and military research and testing activities within the state. These deductions benefit those with multi-state operations who conduct research in New Mexico on items created outside of New Mexico.

The value of space-related test articles used in New Mexico exclusively for research or testing.
The value of equipment and materials used or stored in New Mexico for research or testing of space-related test articles.
The value of test articles upon which research or testing is performed in New Mexico under a contract with the United States Department of Defense, except for test articles purchased by the prime contractor of Sandia or Los Alamos National Laboratories.