February 6, 2024
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Maximizing New Mexico's Film Tax Credits & Partners

Tom Waddick
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New Mexico, known as the "Land of Enchantment," has become an alluring locale for filmmakers due to its enticing film tax breaks. Understanding the intricacies of the state's film tax credits is crucial for producers seeking to optimize their budgets and capitalize on these generous film incentives.

This guide provides a comprehensive overview of New Mexico's film tax credit program.

We'll cover the most frequently asked questions, including what is the tax credit for film in New Mexico, who qualifies for New Mexico film incentives, and who are New Mexico’s production partners?

Wrapbook’s Production Incentive Center

Before we dive into New Mexico’s film tax credit, we invite you to check out Wrapbook’s Production Incentive Center. New Mexico is far from the only state that offers film tax breaks—almost every state in the U.S. has their own unique production incentive program.

Production Incentive Center - Wrapbook - Inline Ad

But navigating these often complex incentives to determine the best state for your next production can be as confusing as it is time-consuming. Until now. Wrapbook’s easy-to-use interactive database makes researching and comparing incentives a breeze.

Why New Mexico?

Let's set the stage with a glimpse into what makes New Mexico a filmmaking paradise. Picture this: a vast desert dotted with cacti, stretching toward majestic mesas lit by vibrant Mojave sunset.

How to Capitalize on Film Tax Incentives in New Mexico - Wrapbook - New Mexico Landscape
The untapped natural beauty of New Mexico awaits. SOURCE

The Land of Enchantment is not just a location; it's a character in your story, enriching your narrative with its unparalleled natural beauty. The state has played host to countless iconic television shows like Breaking Bad, Succession, and Stranger Things and films like Oppenheimer, No Country For Old Men, and Terminator 2: Judgment Day, to name a few

And ever since the New Mexico film tax credit program began in 2002, it pays to film in New Mexico.

How New Mexico film incentives came to be

In the ‘90s, the film industry faced a crossroads as productions began migrating to other countries in search of cost-effective alternatives. Enter the era of film tax credits. New Mexico, like a true trailblazer, introduced incentives to keep the magic of moviemaking within its borders.

These incentives not only breathed life back into the local film scene but also fueled economic growth through job creation and infrastructure development. Over the years, film incentives in New Mexico have evolved to remain competitive with the film incentives offered by other states.

Below, we’ll answer the two most pressing questions: what is the tax credit for film in New Mexico currently and how much can your next production expect to save?

What is the New Mexico film tax credit?

As a powerful incentive for production companies, New Mexico provides a fully refundable tax credit. This means that the state commits to reimbursing production companies for the full amount of their tax credit.

If your production qualifies for a film tax credit in New Mexico, you will get back dollar for dollar what you spend in the state, aligned with the credit percentage that you qualify for. 

And it’s a better time than ever to film in New Mexico. In July 2023, New Mexico updated their film tax credit program, increasing the amount of incentives available to production companies.

The Land of Enchantment now has one of the largest film tax credits in the country; productions can qualify for a 25-40% film tax credit in New Mexico.

The New Mexico film tax credit is as flexible as it is sizable. Unlike some states, the film tax credit in New Mexico does not have a project cap. This means that there is virtually no ceiling on the amount of money that can be awarded to any particular project. This lack of limitation provides production companies with ample freedom to execute projects without constraints.

The New Mexico film tax credit also does not have a minimum spend requirement, meaning that productions are not expected to hit a certain threshold of in-state spending to qualify for film incentives in New Mexico. This allows filmmakers ample latitude to bring their visions to life.

The program’s annual cap, set at $120 million for the fiscal year 2024, represents the total allocation for film tax credits within the fiscal year. This cap ensures that blockbuster productions and indie films alike find a welcoming home in the Land of Enchantment. 

Who qualifies for the New Mexico film tax credit?

Production companies engaging in production or post-production in the state of New Mexico are eligible for a New Mexico film tax credit. Qualifying production types include:

  • Animation
  • Commercials
  • Documentaries
  • Feature films
  • Interactive
  • Music videos
  • Reality TV
  • Scripted TV

By and large, each of these production types must go through the same application process and meet the same criteria to qualify for New Mexico film incentives, but we will take a more in-depth look at the application process in just a second. 

First, let’s take a look at how much your next production stands to gain by filming in New Mexico. 

What expenditures qualify for the New Mexico film tax credit?

Qualified expenditures encompass direct production and post-production spend made within the state of New Mexico. These expenditures must be subject to taxation by the state to qualify for the film tax credit in New Mexico.

Qualified expenditures can be broken down into two categories: wages paid to cast and crew and physical production expenses such as rental fees for equipment and facilities and goods purchased within the state. 

There are also specific expenditures that can qualify your production for additional uplift bonuses, raising your total tax credit as high as 40%.

Cast and crew

Up first, the wages your production pays to cast and crew. The New Mexico film tax credit breaks these down into four categories, including:

Above-the-line residents

Productions that are awarded a New Mexico film tax credit can get a 25% credit for each above the line resident that the production employs. This means that the production will receive back 25% of the in-state wages they pay each above the line resident in the form of a tax credit after filing a New Mexico state tax return.

Above-the-line nonresidents

Productions will also receive a 25% tax credit for every above-the-line nonresident they employ. However, above-the-line non-residents who work behind the camera—like writers, producers, and directors—do not qualify for the film tax credit in New Mexico.

In order for your production to receive the tax credit, all nonresident actors paid via W2 or loan-out must have a New Mexico state income tax withholding of 5.9%.

Additionally, in order for nonresident actors who have a loan-out to qualify for the base 25% tax credit, Gross Receipts Tax must be paid on the loan-out corporation’s behalf. In order to do this, you must utilize what is called a Super Loan Out (SLO).

Productions that want to take advantage of the New Mexico film tax credit generally need to partner with a production payroll service that offers a Super Loan Out. Wrapbook makes Super Loan Outs easy. If you’re trying to qualify for film incentives in New Mexico, we’ll make sure you’re covered.

It should be noted that there is a $5 million cap per production for above-the-line  nonresident actors. There is no cap for above-the-line resident actors.

Below-the-line residents

Productions awarded New Mexico film incentives will also receive a 25% base credit for each below-the-line resident the production employs on all wages paid while the resident is working in state.

Below-the-line nonresidents

Finally, under a program called the Nonresident Below-the-Line-Crew Exemption program, productions can receive a tax credit equal to 15% of wages paid to below-the-line non-resident crew.

The below-the-line non-resident credit is capped at 15% of the production's total New Mexico budget for below-the-line crew wages. There are also limits to the number of below-the-line crew positions which qualify for the tax credit based on the project’s budget.

Visit the New Mexico Film Office’s website for more information.

Expenses

Cast and crew wages make up a sizable portion of most production budgets, but you need more than even the best actors and crew in the industry to really bring a production to life.

That’s why New Mexico offers a tax credit of 25% for physical production expenses. This means productions can get back 25% of every dollar spent on physical goods purchased in state from local vendors.

Whether you’re buying props, resupplying HMU, or renting locations or equipment, the physical production expense credit is a valuable piece of the New Mexico film tax credit. 

Bonuses

With the above mentioned tax credits all at or around 25% you might be asking how can my next production receive the 40% tax credit that New Mexico boasts as the upper limit to its film incentive? That’s where uplift bonuses come in. 

The New Mexico film incentive program offers additional bonuses for productions that meet certain criteria, including:

TV bonus

Ever since 2011, following the success of Albuquerque's very own Breaking Bad, New Mexico has catered their production tax incentives to television. 

TV pilots intended for series produced in New Mexico and TV series intended for commercial distribution, with an order for at least six episodes in a single season and a New Mexico budget of at least $50,000 per episode, are all eligible for an additional 5% bonus tax credit.

Uplift Zone bonus 

In order to boost production (and investment) in more rural areas of the Land of Enchantment, a 10% tax credit is available for qualified expenditures in New Mexico areas at least sixty miles outside the Santa Fe and Albuquerque City Halls.

Considering the vast and varied Southwestern landscapes found within the borders of New Mexico, the uplift bonus is a great way to incorporate majestic backdrops (and free up more cash) on your next shoot.

How to Capitalize on Film Tax Incentives in New Mexico - Wrapbook - New Mexico Scenery
A taste of the majestic and other-worldly landscapes of rural New Mexico. SOURCE

When scouting locations for your production, look to uplift zone bonus eligible places like Las Cruces, Roswell, and the Gila National Forest.

Qualified Production Facility bonus 

The New Mexico film incentive’s third and final uplift bonus is the qualified production facility bonus. 

Productions that are made in a “qualified production facility,” as deemed by the state based on dimensions, set characteristics, and usage, are eligible for a 5% bump. A list of qualified production facilities is available on the film office’s website.

Note: the qualified production facility bonus is only applicable for time spent in production at the qualified production facility and does not apply to offices attached to the QPF.

The TV bonus and qualified production facility bonus also cannot be stacked, so if you’re shooting a television show on a QPF-qualified soundstage, do the math to figure out which bonus will return more money to your production.

What are the requirements for the New Mexico film tax credit?

While the allure of New Mexico film incentives are undeniable, these tax credits come with responsibilities. Audits by a licensed New Mexico CPA are required for credits exceeding $5 million.

And though the New Mexico film tax credit does not have a minimum spend requirement, a script review is required for every production that applies to the program no matter the budget.

Like most state film tax credits, the New Mexico film tax credit also comes with a screen credit requirement. That means you must include acknowledgment in your project’s end screen credits that the production was filmed in New Mexico.

Along with the tax credits outlined above, a select group of production companies have access to a different uncapped tax credit fund through New Mexico’s film production partners program.

What are New Mexico Film Production Partners?

A New Mexico Film Partner is a film production company that has made a commitment to produce films or commercial audiovisual products in New Mexico and purchased or executed a 10-year contract to lease a qualified production facility. They include:

  • NBC Universal
  • Netflix
  • 828 Productions

828 Productions is the newest New Mexico production partner, after relocating their headquarters from Los Angeles to Las Cruces in 2022. 828 Productions plans to invest $75 million to build a 300,000 square foot studio, and 20-acre backlot over the next six years, creating at least 100 high-paying jobs in Las Cruces. 

As New Mexico film production partners, NBC Universal, Netflix, and 828 Productions have access to a separate, uncapped tax credit fund, and can receive a 25-35% credit on eligible expenditures.

The production partners’ program also increases the above the line credit cap from $5 million to $15 million per production. By creating a separate, uncapped fund for big studios, the program helps New Mexico attract larger and more lucrative productions. 

And because New Mexico production partner studios are drawing from a separate fund, they don’t deplete the $120 million fund reserved for the smaller films and TV series.

How to apply for the New Mexico film tax credit

To access and apply for a New Mexico film tax credit, producers can navigate the application process through the official website. The online platform serves as a gateway for submitting applications and gaining more insight into the New Mexico film incentive program.

When applying for a tax credit, productions must submit the Film Production Registration form and the Film Production Tax Credit Agreement form to the New Mexico Film Office 30 days prior to the beginning of principal photography.

Commercials must also submit required forms and include proof of any media buys. 

Finally, standalone post-productions must submit all forms prior to beginning services in New Mexico.

Beyond the New Mexico film tax credit: additional opportunities

In addition to the New Mexico film tax credit program, there are at least two other major film incentives in New Mexico. They are the Film Crew Advancement Program (FCAP) and the Senator John Pinto Memorial Fund

Film Crew Advancement Program (FCAP)

This on-the-job training focuses on New Mexico residents working primarily in technical positions. FCAP provides an incentive for participating companies to create job opportunities for New Mexico residents to advance their careers.  

The FCAP program provides production companies a 50% reimbursement of the qualifying participants’ wages for up to 1,040 hours physically worked by the crew member.

Senator John Pinto Memorial Fund

A separate grant program called the Senator John Pinto Memorial Fund offers grants of up to $5,000 to Native American companies and filmmakers for all types of productions. $100,000 is available through the fund annually.

By giving back to the community in this way, the Senator John Pinto Memorial Fund honors New Mexico’s unique indigenous heritage while fostering diversity and creativity in the industry.

Wrapping up

New Mexico's fully refundable film tax credit makes the Land of Enchantment an enticing destination for productions large and small. The absence of minimum spend requirements, combined with a substantial annual cap, underscores the state's commitment to fostering a flourishing film industry. 

If you’re curious how film incentives in New Mexico stack up against the rest of the country, check out our state-by-state incentive breakdown. Or better yet, head on over to Wrapbook’s new Production Incentive Center where you can have all your incentive questions answered.

Disclaimer

At Wrapbook, we pride ourselves on providing outstanding free resources to producers and their crews, but this post is for informational purposes only as of the date above. The content on our website is not intended to provide and should not be relied on for legal, accounting, or tax advice.  You should consult with your own legal, accounting, or tax advisors to determine how this general information may apply to your specific circumstances.

About the author
Tom Waddick

Tom is a filmmaker, producer, and marketing specialist based in Los Angeles.

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