New Mexico Technology Jobs and R&D Tax Credit
New Mexico Taxation and Revenue Department
5% of NM R&D expenditures
R&D credit that offsets gross receipts tax — unique in the US
New Mexico's Technology Jobs and Research and Development Tax Credit (NMSA 1978 §7-9F) provides a 5% credit on qualified research and development expenditures incurred in New Mexico. Uniquely, the credit can be applied against gross receipts tax (GRT), compensating tax, or income tax — giving businesses flexibility to monetize against whichever liability is largest. The credit is tied to technology job creation: companies must create new qualifying technology jobs in New Mexico to claim. A double-weighted payroll deduction supplements the credit for companies that hire at least one new qualifying employee. Non-refundable with a 4-year carryforward for income tax purposes.
- Funding type
- Tax Credit
- Level
- State
- Amount
- 5% of qualified research and development expenditures (QRDEs) incurred in New Mexico. Credit may be applied against gross receipts tax, compensating tax, or New Mexico income tax liability. Companies that create at least one new qualifying technology job also receive a double-weighted payroll deduction for that employee. Non-refundable; 4-year carryforward for income tax applications.
- Realistic amount
- A New Mexico technology company with $400,000 in qualifying R&D wages and expenses — and at least one new qualifying tec…
- Deadline
- Annual — credit claimed on state income tax return (CIT-1) or gross receipts tax return (CRS-1) for the applicable tax year
- Status
- active
- States
- NM
- Payment model
- tax offset
Who qualifies
- Must be a taxpayer subject to New Mexico gross receipts tax, compensating tax, or income tax. Must incur qualified research and development expenditures (QRDEs) in New Mexico during the tax year. Must create at least one new qualifying technology job in New Mexico to access the credit (job creation is a threshold requirement, not just an enhancement). Qualifying technology jobs must meet minimum wage and benefits thresholds set by TRD. Sole proprietors with no employees may not qualify. Research must meet the federal §41 four-part test (business component, uncertainty, process of experimentation, technological in nature). R&D must be conducted within New Mexico.
Hard requirements
- Requires creating at least true new jobs
How to apply
-
1
Confirm qualifying technology job creation
Verify at least one net-new qualifying technology job has been created in New Mexico during the tax year. Confirm the position meets TRD's minimum wage and benefits thresholds. Document the hire date, job description, and compensation. Without this, the QRDE credit cannot be claimed.
~3 hrs
-
2
Identify and segregate qualified research and development expenditures
Apply the federal §41 four-part test to all R&D activities. Identify qualifying wages (researchers, supervisors, support staff), supplies consumed in research, and contracted research costs (65% of payments to non-employees). Exclude foreign research, social sciences, funded research, and management or administrative activities. All research must be physically conducted in New Mexico.
~8 hrs
-
3
Prepare contemporaneous documentation
Compile time-tracking records, project logs, lab notebooks, source code repositories, or other contemporaneous evidence of qualifying R&D activity. TRD Business Credit Audit Team reviews these if audited. Document the nexus between each employee's time and a qualifying research project.
~5 hrs
-
4
Submit advance review request to TRD (recommended)
Contact TRD Business Credit Audit Team (TRD-BusinessCredit@tax.nm.gov) at least 90 days before filing to request an advance review of your qualifying expenditures and job creation. While not mandatory, advance review significantly reduces audit risk. Provide a project summary, wage allocation, and documentation of qualifying positions.
~4 hrs
-
5
Calculate credit and elect application method
Calculate 5% of total NM QRDEs. Determine whether to apply the credit against gross receipts tax (CRS-1), compensating tax, or income tax (CIT-1). GRT application may be more valuable for companies with substantial GRT liability but limited income tax exposure. Also calculate the double-weighted payroll deduction for any qualifying technology employee hired.
~3 hrs
-
6
File return and claim credit
Claim the credit on the appropriate New Mexico return. For income tax: Schedule A of Form CIT-1. For gross receipts tax: claim on CRS-1 for the applicable reporting period. Retain all supporting documentation for at least 3 years post-filing (TRD audit window). 4-year carryforward applies to unused income tax credits.
~2 hrs
Industry & certifications
NAICS codes: 541511, 541512, 541330, 325412, 541714, 541715, 336411
The GRT offset option is the real unlock — early-stage NM tech companies often have more GRT liability than income tax, making this immediately valuable even at a loss. But the job-creation gate is strict: no net-new qualifying hire, no credit.
Deadline & timing
Filed with annual New Mexico income tax return (due April 15 for calendar-year filers; fiscal-year filers use their year-end due date) or applied against monthly/quarterly gross receipts tax returns. Advance approval from TRD Business Credit Audit Team recommended before claiming; review request should be submitted at least 90 days before filing. No pre-certification required but TRD may audit and disallow uncertified claims.
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Last reviewed 2026. GrantCompass is an independent funding-discovery tool and is not affiliated with any government agency. Always confirm details on the official program page.