New Mexico House Bill HB504

New Mexico 2025 Regular Session

• Introduced: 2/20/25

Caption

National Research Facility Gross Receipts

Summary

HB504 amends New Mexico’s gross receipts tax deduction statutes for manufacturing-related sales and services. Under current law, sellers can deduct receipts from sales of tangible personal property, manufacturing consumables, qualified equipment, and certain professional services when the buyer is engaged in manufacturing and provides the required tax certificate or alternative evidence. The bill keeps those deductions in place but adds a new exclusion: receipts of a prime contractor derived from operating a facility in New Mexico designated by Congress as a national laboratory, or from operating a state-owned research facility, would not qualify for these manufacturing deductions. The bill also preserves and restates the reporting requirements for taxpayers and the Taxation and Revenue Department. Taxpayers claiming the deductions must separately report the amounts, and the department must provide annual reports to legislative committees on the amount claimed, the number of claimants, and whether the deductions are meeting their intended purpose. The bill defines and reaffirms key terms such as manufacturing consumables, manufacturing operations, qualified equipment, and professional services, and it takes effect July 1, 2025.

Impact

HB504 narrows the scope of existing gross receipts tax deductions in Sections 7-9-46 and 7-9-46.1 NMSA 1978 by excluding certain receipts tied to prime contractors operating national laboratories or state-owned research facilities. As a result, those contractors would no longer be able to use the manufacturing-related deductions for qualifying sales or professional services connected to those facilities, while other manufacturers and manufacturing service providers remain eligible under current rules. The bill does not create a new tax; it modifies eligibility for existing deductions and keeps the state’s reporting and oversight framework intact.

Sentiment

Based on the bill text and the absence of recorded committee debate or votes in the provided materials, the overall sentiment appears neutral to supportive of a targeted tax-policy adjustment. The bill’s stated purpose remains to encourage manufacturing in New Mexico and reduce tax pyramiding, while carving out a specific category of prime contractor activity from those benefits. Because no discussion transcript or vote history is provided, there is no evidence of formal opposition or strong controversy in the available record.

Contention

The main point of contention is likely the new exclusion for prime contractors operating national laboratories or state-owned research facilities. Supporters may view the change as a clarification that these entities should not receive manufacturing deductions intended for private manufacturing businesses, while opponents could argue that the exclusion raises costs for contractors supporting major research institutions and may create uneven tax treatment for similar operational activities. Another possible issue is the broader policy question of whether the state should continue narrowing tax preferences versus using them to attract and retain high-value research and manufacturing work.