Lawmakers in New Mexico are deciding whether to expand a state tax incentive that encourages private-sector research and development. The move comes as the state competes with others for advanced manufacturing, energy, aerospace, and computing projects.
The debate is starting early in the 2026 session with House Bill 27, called “TECHNOLOGY JOBS R&D TAX CREDIT EXPANSION,” now moving through House committees. Business and economic development advocates say New Mexico could lose projects and long-term jobs to nearby states that offer stronger R&D incentives.
In a recent Albuquerque Journal opinion column, Davin Lopez, president of New Mexico IDEA, described the policy as a way to leverage the state’s research strengths to attract more private investment and spur business growth. Lopez wrote, “The research and development tax credit is not a giveaway,” and called it a tool to “attract private investment” and support job creation linked to innovation.
Background: New Mexico already has an R&D tax credit, which has clear costs and mixed results.
New Mexico’s Technology Jobs and Research & Development Tax Credit was created in 2000 and has been updated since, according to a July 2025 report from the Legislative Finance Committee (LFC). The LFC says the basic credit is “equal to 5 percent of qualified expenditures,” and it increases to “10 percent” for rural facilities.
There are also extra features tied to payroll growth and partial refundability under certain conditions.
The LFC report estimates that in fiscal year 2024, businesses received $11.2 million in state support through the credit. The program created an average of 165 jobs per year, but the report notes that, based on their models, it does not fully “pay for itself” in direct state revenue.
Supporters of expanding the credit say that as interest grows in quantum, fusion, advanced energy, and other high-cost technologies, incentives can influence where companies set up labs, run pilot projects, and begin early manufacturing. This is especially true when other states are competing for the same investments.
Lopez highlights New Mexico’s national labs, universities, and defense and aerospace presence, saying the state needs more competitive policies to encourage companies to take R&D risks here.
Skeptics usually focus on the trade-offs of tax credits, such as whether they simply shift activity that would have happened anyway, how benefits are spread across regions and industries, and whether the costs limit other economic development efforts. The LFC’s assessment identifies design issues, such as the absence of a spending cap or an end date, but still concludes that the credit likely achieves its main goal.
Here’s what you need to know:
- What’s happening? Lawmakers have introduced HB 27, the “Technology Jobs R&D Tax Credit Expansion,” for the 2026 session.
- What’s the current deal? Right now, New Mexico offers a 5% tax credit on eligible research spending (or 10% if you’re in a rural area). There are also additional rules if you’re hiring more people or seeking a partial refund.
- How much does it cost? In 2024, businesses claimed $11.2 million in tax credits, with 390 claims filed.
- Why does it matter? Supporters say that without stronger incentives, companies might take their research and commercialization elsewhere, leading to fewer jobs and slower growth in New Mexico.
What’s next
The fate of HB 27 is in the hands of legislative committees and will likely be shaped by the usual back-and-forth over budgets and taxes that comes with short sessions.
If the bill passes, businesses and investors will be watching closely: How much bigger will the tax break get? Who will be eligible? Will the credits be refundable? And how will the state keep track of whether these incentives are really helping to create jobs and turn research into real-world products and businesses?
