Incentives & Taxes

Incentives

The City of Rio Rancho has adopted a Comprehensive Economic Development Policy. The purpose of the Policy is to define, encourage, and guide sustainable, long-term, economic and community development in Rio Rancho. Eligible businesses establishing operations in the City have access to programs from both the City of Rio Rancho and the State of New Mexico.  Among the incentives available to eligible companies considering expansion, relocation and/or consolidation to Rio Rancho are the following:

• Fast Track Building Permits/ Construction Inspections
• Impact Fee Waiver
• Gross Receipts Investment Program (Retail Projects)
• Industrial Revenue Bond Financing
• High Wage Jobs Tax Credit
• Manufacturing Investment Tax Credit
• Film Production Incentives
• Child Care Corporate Income Tax Credit

Training

• Job Training Incentive Program
• Step Up Training Program
• New Mexico Workforce Connection (NMWC)
• Additional Tax Credit Information

For detailed information on our incentives please view our Business Location Profile – Rio Rancho.

Taxes

2010 State Business Tax Climate Index

To visit The Tax Foundation Click Here.

Download the 2010 State Business Tax Index Report

Corporate Income Tax Rate	Imposed only on the net income of domestic corporations or foreign corporations business within the state or from the state, or deriving income from property or employment within New Mexico. The rates are: Up to $500,000: 4.8%$500,000- $1 million: $24,000 + 6.4% over $500,000$1 million plus: $56,000 + 7.6% over $1 million Qualified taxpayers may pay an alternative tax of 0.75 % of gross receipts from New Mexico sales.
Sales Factor Weight	The corporate tax structure levies only on net income of the corporation’s business within the state. Separate filing is permitted. There is a double-weighted sales apportionment factor option for manufacturers.
Manufacturer’s Gross Receipts Tax Rate	New Mexico levies a gross receipts tax, not a sales tax. The gross receipts tax rate through June 30, 2009 for these sites is 6.9375%. Exemptions: wages of employees, insurance premiums, receipts from interest and dividends. Deductions: Goods and some services sold for resale, exports (when title and risk of loss pass outside New Mexico), sales by suppliers of components in manufacturing processes construction materials and services sold to a construction contractor for use in a construction project, receipts for selling tangible personal property to governments
Franchise Tax Rate	A uniform fee of $50 per corporation is levied annually. Imposed on each corporation included in the combined unitary or consolidated tax returns if the corporation exercises its corporate franchise in New Mexico whether or not income tax is due. The requirement to file and pay the franchise tax also falls on anyone who files a federal S-corporation return.
Unemployment Insurance (60 Workers)	A new employer in New Mexico starts out with a UI tax rate of 2.0 percent and remains at that rate for a minimum of four years. After four years, the employer is given an experience rating, which can cause the rate to increase or decrease. Employers use the Taxable Wage Base to calculate their employment insurance taxes, which, for 2009, is $20,900.
Workers Compensation - Codes 4829, 8742, 8810 (Premium Per $100)	Fees are $4.30/quarter from every employee at the end of the quarter; $2 via withholdings plus $2.30 from the employer
Sales Tax Rate on M&E and Construction Materials	The State of New Mexico also levies a Compensating Tax, which is a companion tax to the Gross Receipts Tax. It is a “use” tax that is typically levied on the purchaser of the product for using tangible property in the state. The tax applies to imports of factory and office equipment, and other items. It is also used to enforce the conditions of many of the gross receipts tax deductions. Rate is 5% of the value of the property or service at the time of acquisition or introduction into New Mexico, or at the time of conversion of taxable use, whichever is later. Compensating tax is imposed on persons using property, and in some cases, services, in New Mexico on which tax has not been paid to New Mexico or any other state. The tax compensates for the absence of gross receipts tax on the purchase of property for use and is intended to protect New Mexico businesses from unfair competition. New Mexico allows a credit against the compensating tax for sales, use, or similar taxes paid to another state when the buyer acquired the property.
Real Property Tax Total Rate	Among lowest in the country. Rate of assessment is 33 ⅓%. The Rate/$1000 value at the proposed sites are 25.406
Personal Property Tax Total Rate on Manufacturing M&E	Among lowest in the country. Rate of assessment is 33 ⅓%. The Rate/$1000 value at the proposed sites are 25.406.
Fees and Assessments	Insurance Premium Tax: Fee equals 3% of gross premiums, plus an additional 1% surtax on healthcare insurers. All traditional insurance companies, property bondsmen, health maintenance organizations, prepaid dental plans and prearranged funeral plans are covered.

Personal Income Tax

The New Mexico personal income tax (PIT) is based on federal adjusted gross income. The PIT rate is being phased down to 4.9 percent, effective for tax years beginning 2008. The minimum PIT rate is currently 1.7 percent and is not scheduled to change.

New Mexico imposes a tax on the net income of every resident. Residents are taxed on the net income from employment, unearned income, gambling, pensions, annuities, and income from real or personal property in this state or from businesses located in this state. Non-residents are taxed on the net income from property, employment or business in New Mexico.  New Mexico’s personal income tax “piggybacks” on the federal return, using federal adjusted gross income figure as its base.  Net income usually equals federal taxable income, although some special deductions are available.

New Mexico uses the same dollar amounts as the federal government for personal exemptions, standard deductions and itemized deductions.  The 2003 New Mexico Legislature cut the taxable capital gains by half over a period of five years. For tax year 2006, the capital gains deduction increases to the greater of 40 percent or $1,000 and for tax years beginning 2007 New Mexico’s capital gains deduction is the greater of 50 percent or $1,000.

For more information, see NMTRD free publication Information for New Residents (FYI- 101) available for download at www.state.nm.us/tax.