More and more states are offering tax credits for job creation. This is not a surprising development because jobs are a primary engine in creating a vibrant local economy. New Mexico is one of the states jumping on this particular bandwagon.. They offer tax breaks for businesses for Corporate-Supported Child Care, Investment, Job Mentorship, Rural Jobs, Technology Jobs, Welfare-to-Work, and our subject today, High-Wage Jobs.
Eligible taxpayers can receive a tax credit of up to $12,750 per job created. The credit amount is 8.5% of the wages and benefits for each job. There are a number of local organizations lobbying for businesses to choose their area. One is Four Corners Economic Development. They offer suggestions and incentives beyond just tax breaks.
The reason for this credit, and how generous it is, is obvious. Creating jobs is good but creating higher-paying jobs is better. Note that these jobs are not EXTREMELY high-paying jobs, just jobs that have minimum salary requirements to be eligible. These are certainly higher paying than many entry-level jobs.
The New Mexico Taxation and Revenue Department administers the program. There are various requirements to qualify. Jobs in smaller communities, with a population lower than 40,000, jobs must pay at least $40,000 per year. In communities larger than 40,000, the jobs must pay more than $60,000. In both cases, the jobs need to have been created after July 1, 2015. Jobs also have to be held for at least 48 weeks. Employers cannot claim this credit for hiring relatives or someone who owns more than 50% of the company. Employees must be residents of New Mexico. This last requirement is something common to such laws nationwide. Obviously, residents who live in a state pay rent or mortgages in the state and they buy their groceries there too.
Employers need to meet other criteria. The business has to have grown compared to the previous year, made more than 50 percent of sales to customers outside New Mexico during the preceding 12 months of tax liability, and be eligible for the Job Training Incentive Program.
These credits are also not “one and done” credits. Businesses can claim the credit for four years. Obviously, as with most credits, there are other details and criteria. The various forms and applications are available HERE.
Another thing to consider is how this tax break dovetails with the other various tax credits available in New Mexico and how these might intersect with your Federal taxes. Hito is, as always, ready to help you and your business find out the best options. Feel free to contact us any time.