NMSA 1978, § 7-9F-1 Short title
7-9F-1. Short title
Chapter 7, Article 9F NMSA 1978 may be cited as the "Technology Jobs and Research and Development Tax Credit Act".
Laws 2000 (2nd S.S.), ch. 22, § 1; 2015 (1st S.S.), ch. 2, § 10.
Technology Jobs and Research and Development Tax Credit
NMSA 1978 ch. 7, art. 9F
in effectNMSA 1978, § 7-9F-2 Purpose of act
7-9F-2. Purpose of act
It is the purpose of the Technology Jobs and Research and Development Tax Credit Act to provide a favorable tax climate for technology-based businesses engaging in research, development and experimentation and to promote increased employment and higher wages in those fields in New Mexico.
Laws 2000 (2nd S.S.), ch. 22, § 2; 2015 (1st S.S.), ch. 2, § 11.
NMSA 1978, § 7-9F-3 Definitions
7-9F-3. Definitions
As used in the Technology Jobs and Research and Development Tax Credit Act:
A. "affiliate" means a person who directly or indirectly owns or controls, is owned or controlled by or is under common ownership or control with another person through ownership of voting securities or other ownership interests representing a majority of the total voting power of the entity;
B. "annual payroll expense" means the wages paid or payable to employees in the state by the taxpayer in the taxable year for which the taxpayer applies for an additional credit pursuant to the Technology Jobs and Research and Development Tax Credit Act;
C. "base payroll expense" means the wages paid or payable by the taxpayer in the taxable year prior to the taxable year for which the taxpayer applies for an additional credit pursuant to the Technology Jobs and Research and Development Tax Credit Act, adjusted for any increase from the preceding taxable year in the consumer price index for the United States for all items as published by the United States department of labor in the taxable year for which the additional credit is claimed. In a taxable year during which a taxpayer has been part of a business merger or acquisition or other change in business organization, the taxpayer's base payroll expense shall include the payroll expense of all entities included in the reorganization for all positions that are included in the business entity resulting from the reorganization;
D. "department" means the taxation and revenue department, the secretary of taxation and revenue or any employee of the department exercising authority lawfully delegated to that employee by the secretary;
E. "facility" means a factory, mill, plant, refinery, warehouse, dairy, feedlot, building or complex of buildings located within the state, including the land on which it is located and all machinery, equipment and other real and tangible personal property located at or within it and used in connection with its operation;
F. "local option gross receipts tax" means a tax authorized to be imposed by a county or municipality upon a taxpayer's gross receipts, as that term is defined in the Gross Receipts and Compensating Tax Act [Chapter 7, Article 9 NMSA 1978], and required to be collected by the department at the same time and in the same manner as the gross receipts tax;
G. "qualified expenditure" means an expenditure or an allocated portion of an expenditure by a taxpayer in direct connection with qualified research, essential for conducting qualified research at a qualified facility, including expenditures for depletable land and rent paid or incurred for land, improvements, the allowable amount paid or incurred to operate or maintain a facility, buildings, equipment, computer software, computer software upgrades, consultants and contractors performing work in New Mexico, wages paid for employees conducting qualified research in New Mexico at a qualified facility, technical books and manuals and test materials, but not including any expenditure on property that is owned by a municipality or county in connection with an industrial revenue bond project, property for which the taxpayer has received any credit pursuant to the Investment Credit Act [Chapter 7, Article 9A NMSA 1978], property that was owned by the taxpayer or an affiliate before July 3, 2000 or research and development expenditures reimbursed by a person who is not an affiliate of the taxpayer. If a "qualified expenditure" is an allocation of an expenditure, the cost accounting methodology used for the allocation of the expenditure shall be the same cost accounting methodology used by the taxpayer in its other business activities;
H. "qualified facility" means a facility in New Mexico at which qualified research is conducted other than a facility operated by a taxpayer for the United States or any agency, department or instrumentality thereof;
I. "qualified research" means research:
(1) that is undertaken for the purpose of discovering information:
(a) that is technological in nature; and
(b) the application of which is intended to be useful in the development of a new or improved business component of the taxpayer; and
(2) substantially all of the activities of which constitute elements of a process of experimentation related to a new or improved function, performance, reliability or quality, but not related to style, taste or cosmetic or seasonal design factors;
J. "qualified research and development small business" means a taxpayer that:
(1) employed no more than fifty employees as determined by the number of employees for which the taxpayer was liable for unemployment insurance coverage in the taxable year for which an additional credit is claimed;
(2) had total qualified expenditures of no more than five million dollars ($5,000,000) in the taxable year for which an additional credit is claimed; and
(3) did not have more than fifty percent of its voting securities or other equity interest with the right to designate or elect the board of directors or other governing body of the business owned directly or indirectly by another business;
K. "rural area" means any area of the state other than the state fairgrounds, an incorporated municipality with a population of thirty thousand or more according to the most recent federal decennial census and any area within three miles of the external boundaries of an incorporated municipality with a population of thirty thousand or more according to the most recent federal decennial census;
L. "taxpayer" means any of the following persons, other than a federal, state or other governmental unit or subdivision or an agency, department, institution or instrumentality thereof:
(1) a person liable for payment of any tax;
(2) a person responsible for withholding and payment or collection and payment of any tax;
(3) a person to whom an assessment has been made if the assessment remains unabated or the assessed amount has not been paid; or
(4) for purposes of the additional credit against the taxpayer's income tax pursuant to the Technology Jobs and Research and Development Tax Credit Act and to the extent of their respective interest in that entity, the shareholders, members, partners or other owners of:
(a) a small business corporation that has elected to be treated as an S corporation for federal income tax purposes; or
(b) an entity treated as a partnership or disregarded entity for federal income tax purposes; and
M. "wages" means remuneration for services performed by an employee in New Mexico for an employer, not to exceed a maximum annual wage of five hundred thousand dollars ($500,000) per employee.
Laws 2000 (2nd S.S.), ch. 22, § 3; 2015 (1st S.S.), ch. 2, § 12; 2019, ch. 270, § 38; 2019, ch. 274, § 12; 2026, ch. 31, § 11.
NMSA 1978, § 7-9F-4 Administration of act
7-9F-4. Administration of act
The department shall administer the Technology Jobs and Research and Development Tax Credit Act pursuant to the Tax Administration Act.
Laws 2000 (2nd S.S.), ch. 22, § 4; 2015 (1st S.S.), ch. 2, § 13.
NMSA 1978, § 7-9F-5 Basic credit; additional credit; amounts; claimant
7-9F-5. Basic credit; additional credit; amounts; claimant
A. The basic credit provided for in the Technology Jobs and Research and Development Tax Credit Act is an amount equal to five percent of the amount of qualified expenditures made by a taxpayer conducting qualified research at a qualified facility.
B. The additional credit provided for in the Technology Jobs and Research and Development Tax Credit Act is an amount equal to five percent of the amount of qualified expenditures made by a taxpayer conducting qualified research at a qualified facility.
Laws 2000 (2nd S.S.), ch. 22, § 5; 2015 (1st S.S.), ch. 2, § 14.
NMSA 1978, § 7-9F-6 Eligibility requirements
7-9F-6. Eligibility requirements
A. A taxpayer conducting qualified research at a qualified facility and making qualified expenditures is eligible to claim the basic credit pursuant to the Technology Jobs and Research and Development Tax Credit Act.
B. A taxpayer conducting qualified research at a qualified facility and making qualified expenditures is eligible to claim the additional credit pursuant to the Technology Jobs and Research and Development Tax Credit Act if:
(1) the taxpayer increases the taxpayer's annual payroll expense at the qualified facility by at least seventy-five thousand dollars ($75,000) over the base payroll expense of the taxpayer;
(2) the increase in Paragraph (1) of this subsection has not previously been used to meet the requirements of this subsection; and
(3) there is at least a seventy-five-thousand-dollar ($75,000) increase in the taxpayer's annual payroll expense for every one million dollars ($1,000,000) in qualified expenditures claimed by the taxpayer in a taxable year in the same claim.
Laws 2000 (2nd S.S.), ch. 22, § 6; 2015 (1st S.S.), ch. 2, § 15.
NMSA 1978, § 7-9F-8 Rural areas
7-9F-8. Rural areas
The amount of the basic and additional credit for which a taxpayer is otherwise eligible shall be doubled if the qualified expenditures were incurred with respect to a qualified facility in a rural area.
Laws 2000 (2nd S.S.), ch. 22, § 8.
NMSA 1978, § 7-9F-9 Claiming the basic credit
7-9F-9. Claiming the basic credit
A. A taxpayer may apply for approval of a credit within one year following the end of the reporting period in which the qualified expenditure was made.
B. A taxpayer having applied for and been granted approval for a basic credit by the department pursuant to the Technology Jobs and Research and Development Tax Credit Act may claim the amount of the approved basic credit against the taxpayer's compensating tax, withholding tax or gross receipts tax, excluding local option gross receipts tax, due to the state of New Mexico; provided that no taxpayer may claim an amount of approved basic credit for a reporting period in which the basic credit is being claimed that exceeds the sum of the taxpayer's compensating tax, withholding tax and gross receipts tax, excluding local option gross receipts tax, due for that reporting period.
C. Any amount of approved basic credit not claimed against the taxpayer's compensating tax, withholding tax or gross receipts tax, excluding local option gross receipts tax, due may be claimed in subsequent reporting periods for a period of up to three years from the date of the original claim.
Laws 2000 (2nd S.S.), ch. 22, § 9; 2015 (1st S.S.), ch. 2, § 16.
NMSA 1978, § 7-9F-9.1 Claiming the additional credit
7-9F-9.1. Claiming the additional credit
A. A taxpayer may apply for approval of an additional credit pursuant to the Technology Jobs and Research and Development Tax Credit Act within one year following the end of the taxable year in which the qualified expenditure was made.
B. A taxpayer that has applied for and been granted approval for an additional credit by the department pursuant to the Technology Jobs and Research and Development Tax Credit Act may claim the amount of the approved additional credit against the taxpayer's income tax or corporate income tax liability. Except as provided in Subsection C of this section, no taxpayer may claim an amount of approved additional credit for a taxable year in which the additional credit is being claimed that exceeds the amount of the taxpayer's income tax or corporate income tax due for that taxable year.
C. If a taxpayer is a qualified research and development small business and the amount of approved additional credit for the taxable year in which the additional credit is being claimed exceeds the taxpayer's income tax liability or corporate income tax liability, the excess shall be refunded to the taxpayer pursuant to Paragraphs (1) through (3) of this subsection. If the taxpayer's total qualified expenditures for the taxable year for which the claim is made is:
(1) less than three million dollars ($3,000,000), the excess additional credit shall be refunded to the taxpayer;
(2) greater than or equal to three million dollars ($3,000,000) and less than four million dollars ($4,000,000), two-thirds of the excess additional credit shall be refunded to the taxpayer; and
(3) greater than or equal to four million dollars ($4,000,000) and less than or equal to five million dollars ($5,000,000), one-third of the excess additional credit shall be refunded to the taxpayer.
D. Any amount of approved additional credit not claimed against the taxpayer's income tax or corporate income tax due for a taxable year or refunded to the taxpayer may be claimed in subsequent reporting periods for a period of up to three years from the date of the original claim.
E. Married individuals filing separate returns for a taxable year for which they could have filed a joint return may each claim only one-half of the additional credit that would have been claimed on a joint return.
1978 Comp., § 7-9F-9.1, enacted by Laws 2015 (1st S.S.) ch. 2, § 17.
NMSA 1978, § 7-9F-10 Credit claim forms
7-9F-10. Credit claim forms
The department shall provide credit claim forms. A credit claim shall accompany any return in which the taxpayer wishes to apply for an approved basic or additional credit, and the claim shall specify the amount and type of credit intended to apply to each return.
Laws 2000 (2nd S.S.), ch. 22, § 10.
NMSA 1978, § 7-9F-11 Recapture
7-9F-11. Recapture
If the taxpayer or a successor in business of the taxpayer ceases operations in New Mexico for at least one hundred eighty consecutive days within a two-year period after the taxpayer has claimed a basic credit or an additional credit at a facility with respect to which the taxpayer has claimed the basic credit or the additional credit, the department shall grant no further basic credit or additional credit to the taxpayer with respect to that facility. In addition, any amount of approved basic credit not claimed against the taxpayer's gross receipts tax, compensating tax or withholding tax and any amount of approved additional credit not claimed against the taxpayer's income tax or corporate income tax shall be extinguished, and within thirty days after the one hundred eightieth day of the cessation of operations, the taxpayer shall pay the amount of any gross receipts tax, compensating tax or withholding tax for which an approved basic credit was taken and any income tax or corporate income tax against which an approved additional credit was taken. For purposes of this section, a taxpayer shall not be deemed to have ceased operations during reasonable periods for maintenance or retooling or for the repair or replacement of facilities damaged or destroyed or during the continuance of labor disputes.
Laws 2000 (2nd S.S.), ch. 22, § 11.
NMSA 1978, § 7-9F-13 Taxpayer reporting requirement
7-9F-13. Taxpayer reporting requirement
A taxpayer claiming a credit pursuant to the Technology Jobs and Research and Development Tax Credit Act shall file reports with the department. The reports shall be submitted on or before June 30 of the year following a calendar year in which the taxpayer claims a basic or additional credit and by June 30 of each of the two succeeding years. The reports shall contain information describing the taxpayer's business operations in New Mexico that is sufficient for the department to enforce the recapture provision pursuant to Section 7-9F-11 NMSA 1978. If a taxpayer fails to submit a required report, the amount of any basic or additional credit claimed for that year shall be subject to the recapture provision.
Laws 2015 (1st S.S.), ch. 2, § 18.
Source: New Mexico Compilation Commission (nmonesource.com)URL: https://nmonesource.com/nmos/nmsa-unanno/en/item/18507/index.doFetched: 10/20/2026