25% to 30% Refundable Film Production Tax Credit
An additional 5% now applies to qualifying productions*
Thank you for considering New Mexico to produce your project. Our competitive film credit, awe-inspiring locations and professional crew will assist you in making a cost-effective, high-quality project.
Per statute, if your audiovisual project is intended for commercial exploitation and exhibition, it is eligible to receive a refundable tax credit on direct and post-production expenditures rendered in-state and subject to state taxation. And, on April 15, 2013, legislation became effective that included an additional 5% credit, for a total of 30%,for either (1) direct production expenditures for qualifying television series; or (2) payments to resident crew (wages and fringes only) for services during production in New Mexico if a production utilizes a qualifying soundstage for a minimum of 10 or 15 days of principal photography. (Days required are determined by total NM budget.)
There is no minimum budget or spend requirement to participate. And New Mexico does not require submission of a distribution plan from the production company to take advantage of the refundable credit. There is no application fee and no pre-qualification. To begin the process, only a registration form and tax agreement is submitted prior to principal photography. New Mexico’s direct qualifying expenditures include, but are not limited to, resident payroll (fringes included), nonresident per diem, rentals/expendables from vendors with local physical presence, location fees, and payments to nonresident performing artists. A performing artist with a management company (or loan out) qualifies t through a personal business service (or “super loan out,”) for up to a $5 million tax credit when withholding and Gross Receipts Tax is deducted and remitted. Wages for employed actors will also qualify. Payments for post-production services may also qualify when those services are also rendered in New Mexico and are subject to state taxation.
After production, the tax application and backup documentation is submitted to the NM Film Office. Then, the New Mexico Tax and Revenue Department conducts an internal review of the qualifying expenditures, free of charge, to determine the project’s approved claim amount (a 3 to 6 month process). As this is a fully refundable tax credit, the company files their state tax (or informational) return after the close of their taxable year to receive the check or deposit. The filing entity does not have to be based in NM (or have state tax liability) to file a return and receive the credit. If the company does have tax liability in NM, that is subtracted from the credit. The credit is not transferable or assignable. For a project that crosses taxable years, a tax application is submitted for each year in which expenditures occurred either after the last qualifying expenditure is made in that tax year or together, in the same submission, at the end of the project. A production has one year from the date the last qualifying expenditure is booked to submit their tax application(s) to the state for the project.
A credit claim of less than $2 million per taxable year will be paid out immediately upon authorization of the filed tax return. A credit claim of $2 to$5 million will be paid out in two payments: one immediately upon authorization of the filed return and the second twelve months later. A tax credit of $5 million or more will be paid in three installments and requires an external audit by a CPA firm registered and licensed to practice in New Mexico.
New Mexico allows up to $50 million to be expended each fiscal year(July 1 - June 30) on authorized credit claims. If the $50 million has been expended in a given year, your company will still receive the credit; however, your (first) authorized claim will be paid at the beginning of the upcoming fiscal year (July 1). Up to $10 million of unexpended funds in a year may also be "rolled over" to the next fiscal year.
For additional details, please view the links in the drop down under "Refundable Tax Credit" on the side menu and do not hesitate to contact us directly at 505-476-5600. We look forward to assisting you with your project.
Nick Maniatis, Director
New Mexico State Film Office
*April 2013 Legislative Changes to Program