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
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Property which is normally depreciated for tax purposes over
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Would, if used at all times in Indian country, **be depreciated over |
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3 years
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2 years
|
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5 years
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3 years
|
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7 years
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4 years
|
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10 years
|
6 years
|
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15 years
|
9 years
|
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20 years
|
12 years
|
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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.
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**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.