Aviation & Aerospace Incentives

Aerospace Research & Development Tax Deduction
Aircraft Manufacturing Tax Deduction
Aircraft Refurbishing & Remodeling Tax Deduction
Spaceport Operations Exemption
Aerospace & Military Research and Testing Compensating Tax Deductions

For more information or a free custom analysis of tax incentives for your company, call 800-226-2935 or email us.

Aerospace Research & Development Tax Deduction

This incentive benefits New Mexico businesses that sell research and development services that are ultimately sold to the U.S. Air Force.

• Provides deduction from gross receipts for receipts from selling R&D services to the U.S. Air Force, directly or indirectly.
• Covers direct sales to the Air Force, sales to Phillips Laboratory at Kirtland Air Force base for resale to the Air Force, and sales through an intermediary for resale to Phillips Laboratory.

Beginning July 1, 2007--A deduction for receipts from the provision of research, development, testing, and evaluation services for the United States Air Force operationally responsive space program is also included.

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Aircraft Manufacturing Tax Deduction

An aircraft manufacturer’s receipts from selling an aircraft are deductible from gross receipts; however, the deduction for the value of any trade-in must be taken before computing the manufacturer’s deduction. Fifty percent of the receipts from other sales of aircraft are deductible from gross receipts. Beginning July 1, 2007--The deduction was expanded to include selling services performed on aircraft or aircraft components or from selling aircraft flight support, pilot training, or maintentance training services.

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Aircraft Refurbishing & Remodeling Tax Deduction

Receipts from performing the service of maintaining, refurbishing, remodeling or otherwise modifying a commercial or military carrier over ten thousand pounds gross landing weight may be deducted from gross receipts.

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Spaceport Operations Deduction

This incentive benefits businesses involved in several aspect of space-related operations with deductions for:

• receipts from launching, operating or recovering space vehicles or payloads in New Mexico
• receipts from preparing payloads in New Mexico
• receipts from operating a spaceport in New Mexico.

'Space' is defined as any location beyond altitudes of 60,000 feet above mean sea level.

“Spaceport” means an installation and related facilities used for launching, landing, operating, recovering, servicing and monitoring of vehicles capable of entering into or returning from space.

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Aerospace & Military Research And Testing Compensating Tax Deductions

New Mexico offers deductions from its compensating tax (often referred to as a use tax) for use in aerospace and military research and testing activities within the state. These deductions benefit those with multi-state operations who conduct research in New Mexico on items created outside of New Mexico.

• The value of space-related test articles used in New Mexico exclusively for research or testing.
• The value of equipment and materials used or stored in New Mexico for research or testing of space-related test articles.
• The value of test articles upon which research or testing is performed in New Mexico under a contract with the United States Department of Defense, except for test articles purchased by the prime contractor of Sandia or Los Alamos National Laboratories.

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