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Greater Belen EDC
100 South Main St
Belen NM 87002
(505) 864-8221
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BUSINESS INCENTIVES
Incentives for Manufacturing Companies:
Manufacturers Investment Tax Credit
Manufacturers may take a credit equal to five percent of the value of qualified equipment imported and put into use in a manufacturing plant in New Mexico, provided the manufacturer meets the criteria of hiring additional workers to earn the credit, as follows:
For Claims |
1 new worker employed for each |
0-$30,000,000 |
$500,000 qualified equipment |
Over $30,000,000 |
$1 million in qualified equipment |
The credit may 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.
Double Weight Sales Factor
A corporation (or family of corporations filing together) with income from sources within New Mexico as well as from sources outside the state, apportions the income based on a three-factor formula. New Mexico taxes the total corporate income times the average proportion of corporate sales, payroll, and property in New Mexico. The three factors (sales, payroll, and property) have equal weight (33.3 percent each) in the formula.
For a limited time (through the year 2010) manufacturers may elect to use a modified formula which gives the sales factor a 50 percent weight, reducing the other two to 25 percent apiece. The sales factor now has twice the significance of the other two, thus, the “double-weighted sales factor formula.”
For purposes of electing the four-factor apportionment method, “manufacturing” excludes construction, farming, power generation, and processing of natural resources, while allowing certain natural-gas-fired, wholesale power plants to qualify. The taxpayer, having elected to use the double-weighted formula, must use it for at least three consecutive years.
Industrial Revenue Bonds
There are two types of Industrial Revenue Bonds (IRBS) in New Mexico: tax exempt IRBs and taxable IRBs. Both types can exempt up to 100% of property taxes. Industrial Revenue Bonds (IRBs) in New Mexico are not used as a financing tool, but rather as a tool to accomplish tax exemption. The exemption is achieved because legally the plant is city or county owned. The company makes lease payments to a bond trustee, who acts as a third party and uses the money to pay off the bonds. The exemption is in effect for the duration of the lease payments. Many companies expanding or coming to New Mexico have used this exemption program. Intel, for instance, received a record $8 billion in IRB5. Taxable IRBs are not subject to IRS regulations or state caps. The primary advantages of IRB5 include:
- The exemption of ad valorem property taxes for the term of the bond.
- The exemption of gross receipts (5%) and compensating tax (5%).
- Tax-free bonds have lower interest rates than taxable bonds
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More on New Mexico's Business Incentives at :
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