Lower Taxes
State
of New Mexico
New Mexico recently passed a law to give state tax credit to manufacturing companies
against any taxes paid by such companies to an Indian tribe.
Federal Tax
Indian Investment and Employment Tax §13321:
This incentive allows for faster depreciation of machinery and equipment
if used on the Navajo Nation. Usually, many types of machinery are depreciable
over seven
years; however, under the act, property used on an Indian reservation is depreciable
over four years. This incentive reduces the business’ cost of capital by
allowing the investor to receive the resulting tax savings sooner.
Comparison of Regular Depreciable Lives with Indian
Country Depreciable Live
Property
which is normally depreciated for tax purposes over
|
Would, if
used at all times in Indian country, **be depreciated over
|
3
years
|
2
years
|
5
years
|
3
years
|
7
years
|
4
years
|
10
years
|
6
years
|
15
years
|
9
years
|
20
years
|
12
years
|
39
years*
|
22
years
|
* Non-residential real property
** A special rule for “reservation infrastructure investment” would
allow accelerated
depreciation under specified circumstances, for certain infrastructure property
used or located outside of an Indian reservation.
Indian Employment Credit Act §13322:
This incentive provides private sector employers a 20% credit against income
tax liability for the first $20,000 dollars of wages and benefits paid to
an Indian worker.
___________________________________________________________________
**Both of these federal tax incentives are available to small and large businesses
for a 10-year period beginning January 1, 1994. We expect the act to be reauthorized
for another 10 years. Neither of these incentives can be used with investment/employment
connected with Class I, II, or III gaming activity.
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