Tax credit extension reassures investors, startups, supporters say
The state’s angel investment tax credit was extended last month, a move supporters say creates certainty and gives those involved more time to build upon the credit in the years to come.
House Bill 252, the larger tax package Gov. Michelle Lujan Grisham signed into law after this year’s legislative session, includes the extension through the end of 2030, said New Mexico Angels President Drew Tulchin. The credit was originally set to expire at the end of next year.
“We wanted to get this done because … investors crave certainty,” said Amy Brown, chief operating officer of Adelante Consulting, a lead organization in getting the credit extended. “Even though it wasn’t going to immediately expire, we knew that people depending on this vehicle for their startup companies, their startup ventures, and investors, would take reassurance from the fact that it’s now going to be the law of New Mexico through 2030.”
The credit allows New Mexico investors to claim an income tax credit for up to 25% of their investment, up to $62,500 per investment five times a calendar year, said Tulchin. The annual cap for the credit is $2 million per year.
What that does, he said, is incentivize accredited investors to “more readily write a check” to companies looking to grow their business.
When investors pour money into these local companies, he said, it leads “to [companies] being able to grow stronger and faster and create more jobs for New Mexico.”
Tulchin pointed to some New Mexico companies that have grown thanks to the credit, including Los Alamos-based UbiQD and Albuquerque’s Build With Robots. The latter company, according to a New Mexico Angels document, has utilized $5 million in investments to add dozens of jobs and realize millions in revenue.
The New Mexico Angels investor group says more than $37 million has been invested by 447 investors into 289 companies from 2012-19. The jobs at companies invested in with the help of the credit, Tulchin added, also tend to have higher wages.
The extension will also give key stakeholders more time to figure out how to improve the way investments are done. For instance, that could mean raising the annual cap for the credit itself. It could also mean making the credit available to investors outside of New Mexico, as the film tax credit is; as it stands, only investors who file New Mexico tax returns are eligible.
“If you think about the film industry, for example, if the film tax credit were limited to the 2.2-whatever-million people who live in New Mexico and out of that subset who file personal income taxes, how many Oppenheimers would get made? Probably none,” said Brown. “[Oppenheimer] cleaned up at the Academy Awards recently. That’s exactly what we want to see here — we want to see the ability to attract out-of-state money.”