Bill to continue angel investment tax credit soars through first committee

SANTA FE — Full bipartisan support launched a bill that aims to extend the angel investment tax credit through its first committee of the session.

The House Commerce and Economic Development Committee unanimously passed House Bill 83, which would push the sunset on angel investment tax credits to 2030.

Angel investments are when investors put money into start-up businesses, something that can be risky. New Mexico lawmakers enacted the credit on certain investments in 2007, and it’s currently set to expire at the end of 2025.

It was a 10-0 committee vote to keep the program going for an additional five years.

Under the bill, credits on qualified investments couldn’t exceed 25% of the investment, or $62,500.

Extending the credit would cost the state’s general fund up to $2 million each additional year, according to the bill’s fiscal impact report.

Similar extension bills have failed in the past, partly because the legislation would have been a refundable credit. House Bill 83 this year puts forth a nonrefundable credit.

Rep. Alan Martinez, R-Bernalillo, said only New Mexico taxpayers could take advantage of the credit.

Bill sponsor Rep. Linda Serrato, D-Santa Fe, said because it’s a nonrefundable tax credit, it can only be against how much someone is paying in taxes to New Mexico.

“Our biggest concern at this point is that we would lose this tax credit that already exists,” Serrato said.

Serrato said 31 states have some sort of tax credit for angel investors.

“If we lose this tool in our toolbox to keep that money in our state, then we lose the people that are already investing in our state,” she said. “And that would be a tragedy.”

A few investors showed up on Friday to support the bill. David Perez, chair of the New Mexico Angels, said over 550 companies have invested through the Angels and support the tax credit.

“We see it as very important for economic development issues and competitiveness in this region,” he said.

Republican Reps. Jimmy Mason, Artesia, and Mark Duncan, Kirtland, said it often feels like New Mexico makes it a difficult landscape for businesses.

Serrato said the tax package this year takes a balanced approach .

“We want to see more investment,” she said. “We want to see the growth in how many individuals are investing and really use up that $2 million.”

The Taxation and Revenue Department said the average aggregate amount applied toward personal income tax liability in the past five fiscal years is $900,000, according to the bill’s fiscal impact report. Mason asked why half the fund hasn’t been used.

Serrato said that often comes down to a lack of capital in the state. She said there are a lot of bills working to address that .

“There is room for growth within where we’re at now,” she said.

House Bill 83 is set to go to the House Taxation and Revenue Committee next.

Lawmakers in the taxation committee tabled another tax credit bill, House Bill 73, focused on clean energy storage systems .