Tax credits continue for angel investors’ good tidings

Investors have more time to receive tax credits for money they put into startup business ventures.

This year’s tax package extended the deadline on the state’s angel investment credit through 2030. Investors can get up to 25% back, no more than $62,500, on angel investments made before 2031.

Angel investors provide capital to startup businesses, helping them get off the ground. The tax credit is a way to incentivize investment into New Mexico businesses and promote economic growth.

New Mexico Angels President Drew Tulchin and Chair David Perez wrote in a July op-ed that the state can move forward with more investments in startups.

"A package including tax rebates, investment capital and technical assistance will go a long way to not only draw companies, but also keep them here for the long term," they wrote.

The angel investment credit was formerly set to expire at the end of 2025, but lawmakers ensured there’s more time available.

How it works

The credit is deducted from the investor’s income tax liability, and any unused portion of the credit can be carried forward for five consecutive years.

Taxpayers can’t claim the credit more than once per investment round and can claim the credit for up to five businesses in a taxable year.

Investors must apply for the credit within one year following the end of the calendar year they made the investment.

Companies have to apply for the credit before investors can.

There’s a $2 million cap on angel investment credits per year, and the system operates on a first-come, first-serve basis. If an investor misses out on the credit because the program is capped out for the year, they can apply again the next year.

Companies and investors can apply for the credit through the New Mexico Taxation and Revenue Department with form TRD-41404,

What laws or policies do you want to see written about in Business Outlook? Send an email to mgleason@abqjournal.com.