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Rural Job Tax Credit
Eligible employers may earn the rural job tax credit for each qualifying job created after July 1, 2000, applying it to taxes due on the CRS return or to corporate or personal income tax. An “eligible employer” is one whom the Economic Development Department (505-827-0300) has approved for Job Training Incentive Program assistance. A qualifying job is a job filled by an eligible employee for 48 weeks in a 12-month qualifying period.
Employers receive a credit of 6.25% of the first $16,000 in wages paid for a qualifying job. If the job is located in Tier One, the employer receives credit for four consecutive years. A Tier Two employer may take it for two consecutive years. (Tiers are defined below.) The application deadline is June 30, 2006. If the amount of credit for a qualifying period exceeds the owner’s tax liability for the period, the excess may be carried forward for up to three years.
Rural New Mexico is defined as any part of the state other than Los Alamos County, certain municipalities (Albuquerque, Rio Rancho, Las Cruces, Santa Fe) and a ten-mile zone around those select municipalities. The rural area is divided into two tiers: Tier 2--all the rural area municipalities that exceed 15,000 in population (Alamogordo, Carlsbad, Clovis, Farmington, Gallup, Hobbs, Roswell); Tier 1--everywhere else in the rural area.
For each new qualifying job created, the amount of credit that may be earned:
- Tier 1: 25% of the first $16,000 in wages paid—to be claimed in installments of 6.25% per year (a maximum annual credit of $1,000 per job) for 4 years
- Tier 2 – 12.5% of the first $16,000 in wages paid—to be claimed in installments of 6.25% per year (a maximum annual credit of up to $1,000 per job) for 2 years
An eligible employer may apply to the Taxation and Revenue Department for the credit. As part of the application, the business must certify its eligibility for the credit, the amount of wages eligible for credit and whether the jobs are in Tier 1 or Tier 2. If approved, a document will be issued in the amount of the credit. The document is numbered, carries its date of issuance, and is transferable. If transferred, the parties notify the Taxation Department of the transfer within ten days of transfer. The document remains valid for three years after its date of issuance. The owner of the tax credit document may offset the approved credit against state taxes owed on the CRS-1 form (state gross receipts tax, compensating tax and withholding tax) or against income tax (personal or corporate, depending on how the owner is organized). Not all of the credit earned, however, may be taken at once. If the job is in Tier 2, 50% of the credit may be taken within each qualifying period (the 12 months beginning on the anniversary date of the day an eligible employee filled a qualifying job). For Tier 1 jobs, only 25% of the credit may be taken within any qualifying period. Only jobs created within the period July 1, 2000 through June 30, 2005 are eligible. Employers have until June 30, 2006 to apply to the Tax Department for this credit.
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