QUANTUM FACILITY INFRASTRUCTURE TAX CREDIT

SB0036

SENATE BILL 36

57th legislature - STATE OF NEW MEXICO - second session, 2026

INTRODUCED BY

Michael Padilla
and
Joshua N. Hernandez

AN ACT

RELATING TO TAXATION; CREATING THE QUANTUM FACILITY
INFRASTRUCTURE INCOME TAX CREDIT AND THE QUANTUM FACILITY
INFRASTRUCTURE CORPORATE INCOME TAX CREDIT; PROVIDING A DELAYED
REPEAL.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

SECTION 1.
A new section of the Income Tax Act is enacted
to read:

"[
NEW MATERIAL
] QUANTUM FACILITY INFRASTRUCTURE INCOME TAX
CREDIT.--

A. For taxable years ending prior to January 1,
2029, a taxpayer who is not a dependent of another individual
and who makes at least three million dollars ($3,000,000) in
qualified expenditures for infrastructure or qualified
equipment for a quantum facility located in New Mexico may
claim a credit against the taxpayer's tax liability imposed
pursuant to the Income Tax Act in the amount provided in
Subsection B of this section. The credit provided by this
section may be referred to as the "quantum facility
infrastructure income tax credit".

B. Subject to the total aggregate amount allowed
pursuant to Subsection E of this section, the amount of credit
shall be in an amount equal to thirty percent of the amount of
the qualified expenditures made by the taxpayer for
infrastructure or qualified equipment for a quantum facility,
not to exceed fifty million dollars ($50,000,000) per quantum
facility.

C. Prior to incurring a qualified expenditure, a
taxpayer shall apply for preliminary certification of
eligibility for the credit from the economic development
department on forms and in the manner prescribed by that
department. Such preliminary certification shall be limited to
confirming that the qualified expenditures proposed to be made
by the taxpayer will in whole or in part be used to provide
infrastructure for a quantum facility and an estimate of the
amount of credit for which the taxpayer may be eligible. Only
one certificate of eligibility shall be issued for a quantum
facility, regardless of ownership of the facility.

D. For qualified equipment to be eligible as a
qualified expenditure, the equipment shall be installed,
maintained and operated in New Mexico for a period of not less
than ten years from the date of certification. If qualified
equipment for which a credit was allowed is relocated outside
New Mexico, sold or otherwise withdrawn from service in New
Mexico before the end of that period, the taxpayer shall repay
the portion of the credit corresponding to the time remaining
in that period. The requirements of this subsection shall not
apply to temporary removal for repair, calibration or warranty
service, if the equipment is timely replaced with substantially
similar equipment that is installed and operated in New Mexico
or if removal is due to casualty and the property is timely
restored or replaced in New Mexico.

E. Within twelve months of completion of
construction of a quantum facility or first use of qualified
equipment, the taxpayer shall seek final certification from the
economic development department. The annual aggregate amount
of quantum facility infrastructure income tax credits and
quantum facility infrastructure corporate income tax credits
that may be certified for a calendar year shall not exceed
fifty million dollars ($50,000,000).

F. An application for final certification shall
include information required by the economic development
department to determine eligibility for the credit and shall
include:

(1) information substantiating qualified
expenditures;

(2) for a tax credit allowed for qualified
equipment, the number of internship, apprenticeship, research
or training opportunities provided in collaboration with a
public post-secondary educational institution related to
qualified equipment or the operation of a quantum facility; and

(3) for a tax credit allowed for qualified
equipment for a quantum computing testbed, the reasonable
efforts made by the taxpayer to provide shared use or
partnership opportunities on reasonable terms.

G. If the economic development department
determines that a taxpayer meets the requirements of this
section, that department shall issue a dated certificate of
eligibility to the taxpayer providing the amount of credit for
which the taxpayer is eligible and the taxable years in which
the credit may be claimed. The economic development department
shall provide the department with the certificates of
eligibility issued pursuant to this subsection in secure
electronic format at regularly agreed-upon intervals.

H. A taxpayer allowed to claim the credit shall
claim the credit in a manner required by the department. The
credit shall be claimed within one year of receiving final
certification from the economic development department. The
taxpayer shall claim the amount certified and approved against
the taxpayer's income tax liability. Any amount of credit that
exceeds the taxpayer's income tax liability shall be refunded
to the taxpayer.

I. Married individuals filing separate returns for
a taxable year for which they could have filed a joint return
may each claim only one-half of the credit that would have been
claimed on a joint return.

J. A taxpayer may be allocated the right to claim
the credit in a proportion to the taxpayer's ownership interest
if the taxpayer owns an interest in a business entity that is
taxed for federal income tax purposes as a partnership or
limited liability company and that business entity has met all
of the requirements to be eligible for the credit. The total
credit claimed by all members of the partnership or limited
liability company shall not exceed the allowable credit
pursuant to this section.

K. The tax credit provided by this section shall be
included in the tax expenditure budget pursuant to Section
7-1-84 NMSA 1978, including the annual aggregate cost of the
tax credit.

L. As used in this section:

(1) "qualified equipment" means specialized
scientific and engineering equipment essential to the operation
of a quantum facility pursuant to rules promulgated by the
department of information technology;

(2) "qualified expenditure" means an
expenditure made by a taxpayer for land and rent paid or
incurred for land, improvements, buildings or infrastructure
required for a quantum facility, but not including any
expenditure for property that is owned by a municipality or
county in connection with an industrial revenue bond project,
property for which the taxpayer has received any credit
pursuant to the Investment Credit Act or property that was
owned by the taxpayer or an affiliate before January 1, 2026.
If a "qualified expenditure" is an allocation of an
expenditure, the cost accounting methodology used for the
allocation of the expenditure shall be the same cost accounting
methodology used by the taxpayer in its other business
activities;

(3) "quantum computing testbed" means an open-
access, trapped-ion quantum computer testbed providing
researchers with white-box control, which involves observing or
modifying a neural network's internal activations and workings
to prevent potential harm from misaligned artificial
intelligence models, over hardware to study quantum computing
fundamentals, architecture and algorithms that is funded by the
office of science of the United States department of energy;

(4) "quantum facility" means a facility in New
Mexico at which research and development in quantum technology
is conducted, other than a facility operated by a taxpayer for
the United States or any agency, department or instrumentality
thereof; and

(5) "quantum technology" means technology that
relies on quantum superposition or quantum entanglement or
innovations that enable those technologies."

SECTION 2.
A new section of the Corporate Income and
Franchise Tax Act is enacted to read:

"[
NEW MATERIAL
] QUANTUM FACILITY INFRASTRUCTURE CORPORATE
INCOME TAX CREDIT.--

A. For taxable years ending prior to January 1,
2029, a taxpayer that makes at least three million dollars
($3,000,000) in qualified expenditures for infrastructure or
qualified equipment for a quantum facility located in New
Mexico may claim a credit against the taxpayer's tax liability
imposed pursuant to the Corporate Income and Franchise Tax Act
in the amount provided in Subsection B of this section. The
credit provided by this section may be referred to as the
"quantum facility infrastructure corporate income tax credit".

B. Subject to the total aggregate amount allowed

pursuant to Subsection E of this section, the amount of credit

shall be in an amount equal to thirty percent of the amount of

the qualified expenditures made by the taxpayer for

infrastructure or qualified equipment for a quantum facility,

not to exceed fifty million dollars ($50,000,000) per quantum

facility.

C. Prior to incurring a qualified expenditure, a
taxpayer shall apply for preliminary certification of
eligibility for the credit from the economic development
department on forms and in the manner prescribed by that
department. Such preliminary certification shall be limited to
confirming that the qualified expenditures proposed to be made
by the taxpayer will in whole or in part be used to provide
infrastructure for a quantum facility and an estimate of the
amount of credit for which the taxpayer may be eligible. Only
one certificate of eligibility shall be issued for a quantum
facility, regardless of ownership of the facility.

D. For qualified equipment to be eligible as a
qualified expenditure, the equipment shall be installed,
maintained and operated in New Mexico for a period of not less
than ten years from the date of certification. If qualified
equipment for which a credit was allowed is relocated outside
New Mexico, sold or otherwise withdrawn from service in New
Mexico before the end of that period, the taxpayer shall repay
the portion of the credit corresponding to the time remaining
in that period. The requirements of this subsection shall not
apply to temporary removal for repair, calibration or warranty
service, if the equipment is timely replaced with substantially
similar equipment that is installed and operated in New Mexico
or if removal is due to casualty and the property is timely
restored or replaced in New Mexico.

E. Within twelve months of completion of
construction of a quantum facility or first use of qualified
equipment, the taxpayer shall seek final certification from the
economic development department. The annual aggregate amount
of quantum facility infrastructure income tax credits and
quantum facility infrastructure corporate income tax credits
that may be certified for a calendar year shall not exceed
fifty million dollars ($50,000,000).

F. An application for final certification shall
include information required by the economic development
department to determine eligibility for the credit and shall
include:

(1) information substantiating qualified
expenditures;

(2) for a tax credit allowed for qualified
equipment, the number of internship, apprenticeship, research
or training opportunities provided in collaboration with a
public post-secondary educational institution related to
qualified equipment or the operation of a quantum facility; and

(3) for a tax credit allowed for qualified
equipment for a quantum computing testbed, the reasonable
efforts made by the taxpayer to provide shared use or
partnership opportunities on reasonable terms.

G. If the economic development department
determines that a taxpayer meets the requirements of this
section, that department shall issue a dated certificate of
eligibility to the taxpayer providing the amount of credit for
which the taxpayer is eligible and the taxable years in which
the credit may be claimed. The economic development department
shall provide the department with the certificates of
eligibility issued pursuant to this subsection in secure
electronic format at regularly agreed-upon intervals.

H. A taxpayer allowed to claim the credit shall

claim the credit in a manner required by the department. The

credit shall be claimed within one year of receiving final

certification from the economic development department. The

taxpayer shall claim the amount certified and approved against

the taxpayer's income tax liability. Any amount of credit that

exceeds the taxpayer's income tax liability shall be refunded

to the taxpayer.

I. The tax credit provided by this section shall be
included in the tax expenditure budget pursuant to Section
7-1-84 NMSA 1978, including the annual aggregate cost of the
tax credit.

J. As used in this section:

(1) "qualified equipment" means specialized
scientific and engineering equipment essential to the operation
of a quantum facility pursuant to rules promulgated by the
department of information technology;

(2) "qualified expenditure" means an
expenditure made by a taxpayer for land and rent paid or
incurred for land, improvements, buildings or infrastructure
required for a quantum facility, but not including any
expenditure for property that is owned by a municipality or
county in connection with an industrial revenue bond project,
property for which the taxpayer has received any credit

pursuant to the Investment Credit Act or property that was
owned by the taxpayer or an affiliate before January 1, 2026.
If a "qualified expenditure" is an allocation of an
expenditure, the cost accounting methodology used for the
allocation of the expenditure shall be the same cost accounting
methodology used by the taxpayer in its other business
activities;

(3) "quantum computing testbed" means an open-
access, trapped-ion quantum computer testbed providing
researchers with white-box control, which involves observing or
modifying a neural network's internal activations and workings
to prevent potential harm from misaligned artificial
intelligence models, over hardware to study quantum computing
fundamentals, architecture and algorithms that is funded by the
office of science of the United States department of energy;

(4) "quantum facility" means a facility in New
Mexico at which research and development in quantum technology
is conducted, other than a facility operated by a taxpayer for
the United States or any agency, department or instrumentality
thereof; and

(5) "quantum technology" means technology that

relies on quantum superposition or quantum entanglement or

innovations that enable those technologies."

SECTION 3.
DELAYED REPEAL.--Sections 1 and 2 of this act
are repealed effective January 1, 2030.

SECTION 4.
APPLICABILITY.--The provisions of this act
apply to taxable years beginning on or after January 1, 2026.

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