The New Mexico R&D tax credit, explained
New Mexico's Technology Jobs and R&D credit runs 5% to 20% of qualified spend, with a refundable portion for small research businesses.
Last verified July 2026 against New Mexico Taxation and Revenue Department guidance.
The short answer
Yes, New Mexico has a state R&D tax credit. The Technology Jobs and Research and Development Tax Credit, administered by the New Mexico Taxation and Revenue Department, has two parts: a basic credit and an additional credit tied to payroll growth.
How the New Mexico credit works
The basic credit is 5% of qualified research expenditures at a New Mexico facility, doubling to 10% if the facility is in rural New Mexico, meaning anywhere outside Los Alamos, Santa Fe, and Bernalillo counties and Rio Rancho. The additional credit adds another 5%, or 10% in rural areas, if the company grows its payroll by at least $75,000 for every $1 million in qualified expenditures claimed.
The basic credit is nonrefundable. The additional credit can be refundable for qualified research and development small businesses, defined as companies with 50 or fewer employees and no more than $5 million in qualified expenditures for the year. Larger companies can still use the additional credit, just not as a refund.
How it stacks with the federal credit
New Mexico's credit stacks with the federal R&D credit, worth roughly 6% to 10% of qualified research spend, since both apply to the same underlying research expenditures. A New Mexico company doing rural research with strong payroll growth can reach a combined state rate as high as 20%.
Startups under $5 million in revenue can also apply the federal credit against up to $500,000 a year in payroll taxes. For small New Mexico research companies, the refundable portion of the additional state credit can add cash on top of that, even before the company owes any state tax.
Example: a New Mexico startup with 13 engineers and an average salary of $103,000 spends about $1,339,000 a year on qualified research at an urban facility. With payroll growth that clears the threshold, it can claim the basic 5% plus the additional 5%, for a combined $133,900 in state credit. If the company has 50 or fewer employees, the additional credit's $66,950 share can come back as a refund. The federal credit on the same spend runs roughly $93,730, bringing the total combined credits toward $227,630.
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Eligibility and how to claim it
Companies doing qualified research at a facility in New Mexico can apply, with the biggest state credit rates available to rural facilities and companies that grow payroll alongside their research spending.
The credit requires a two step process with the New Mexico Taxation and Revenue Department: first an application, Form RPD-41385, filed within one year of the close of the expenditure year, then a claim form, Form RPD-41386, filed once the application is approved. There is a $5 million per year cap on qualified expenditures eligible for the basic credit.
Claimship preps the qualified research expense documentation both New Mexico forms require. The company's CPA files the application and claim forms with the New Mexico Taxation and Revenue Department and claims the credit against gross receipts, compensating, withholding, or income tax.
Official source: New Mexico Taxation and Revenue Department.
Carryforward and deadlines
Unused credit carries forward for 3 years from the date of the original claim. Credits are forfeited if the business stops operating in New Mexico for 180 consecutive days within a two year period.
The application, Form RPD-41385, must be filed within one year following the end of the calendar year in which the qualified expenditures were made, so this is a firm annual deadline to track rather than something claimed whenever convenient at filing time.