ANNOUNCEMENT 04 Apr 2019
New Mexico modified and expanded its high-wage tax credit program.
NUMBER OF INTERVENTIONS
On April 4, 2019 the governor of New Mexico signed into law a bill (HB165) that modifies the state’s high wage tax credit program. That program was first created in 2004, providing a tax credit equal to 10% of wages and benefits of new employees in “high wage jobs.” The law defined an “eligible employee” to mean “an individual who is employed in New Mexico by an eligible employer and who is a resident of New Mexico.” The total credit was limited to $12,000 per eligible employee. An eligible high-wage job had to be created after July 1, 2004 and before July 1, 2009; be occupied for at least 48 weeks of the year prior to the claim for credit; and pay at least $40 thousand per year if located in a municipality of 40,000 or more residents, or at least $28,000 per year elsewhere in the state. Subsequent legislation made modifications to the program, including its extension through July 1, 2020.
In addition to renewing the program through July 1, 2026, the 2019 amendments to this program reduce the percent value of the credit from 10% to 8.5% but increase the annual per-job maximum by $750 (i.e., to $12,750). The net effect is expected to be an expansion in the subsidy. According to a fiscal analysis conducted by Legislative Finance Committee, “the long-term cost” of these changes “is estimated at up to $10 million annually” in lost state revenue by Fiscal Year 2023. If not for enactment of this bill, there would be no such revenue loss (i.e., the program would expire).
The changes are retroactive to January 1, 2019.