New Mexico Legislature Approves Technology Tax Credit Legislation

In the last days of a special legislative session, the New Mexico Legislature unanimously passed two technology tax credit bills. Entitled the “Technology Jobs Tax Credit Act” and the “Laboratory Partnership with Small Business Tax Credit Act,” these measures are intended to assist New Mexico’s technology-based businesses with the development of increased research investments and laboratory partnerships, especially in rural areas.

The Technology Jobs Tax Credit Act provides a four-percent basic tax credit against expenditures of technology-based companies participating in research, development, and experimentation at qualified research facilities in the state. An additional four-percent tax credit is provided to businesses that participate in research and development in the state and increase their payroll by $75,000 for every $1,000,000 expended for R&D. If these activities take place in the designated rural areas of the state, the tax credits are doubled. According to the fiscal analysis, the credits are expected to cost the state $6.6 million in FY 2001 and $7.1 million in FY 2002.

The Laboratory Partnership with Small Business Tax Credit Act is designed to link the expertise and technology of national laboratories with small businesses in the state of New Mexico to promote economic development. In order to qualify for a credit of up to $1.8 million on its obligations for the Gross Receipts and Compensating Tax, a national lab must establish a small business assistance program and a revolving fund, consult with the Secretary of Economic Development to seek advice on improvements in the operation of the program, and establish a methodology to use qualified small business assistance contractors. Tax credits are equal to the qualified expenditures of the laboratories, not to exceed $5,000 for each small business. In rural areas, the maximum expenditure amount is $10,000 per small business.

Both bills await Governor Johnson’s signature or veto.