Research & Development Small Business Tax Credit

Effective July 2005, a qualified small business is provided a credit equal to the sum of all gross receipts, compensating and withholding taxes due to the state or payable by the taxpayer if at least 20 percent of their total annual expenditures were on qualified research. The credit is available for up to the three years or until the first of the following occur:

• The Credit
• All gross receipts, compensating and withholding tax due in reporting periods while a qualified small business.
• May be claimed for up to three years.
• Claiming the credit bars claims in the same periods for the Manufacturers Investment Credit or the Technology Jobs Tax Credit.

• Qualifying Small Business
• Employs no more than 25 employees (or FTE) in any calendar month.
• Revenue no more than $5M in any prior fiscal year.
• Qualifying research expenditures at least 20% of total business expenditures in the twelve months prior to claiming the credit.
• Not controlled by another entity

• Qualifying Research
• Technological research and experimentation in New Mexico to develop new or improved business component of the taxpayer.
• Not contract research for others or research paid for with grant money.

• Qualifying Expenditures
• Taxpayer expenditures directly related to qualified research in New Mexico
  
• Excluding expenses for property purchased under and Industrial Revenue Bond, property or expenditures supporting a claim for the Manufacturers Investment Credit or Technology Jobs Tax Credits.