ALBUQUERQUE, N.M.—Republican Gov. Susana Martinez proposes to expand economic development tax incentives aimed at encouraging investment in startup and technology companies.

Martinez outlined the measures on Friday. The tax changes will need approval of the Legislature to take effect.

One proposal expands a tax credit provided to "angel investors" who help finance new companies. The governor wants to provide up to $2 million a year in credits, up from a current $750,000 cap, and increase the individual investments that qualify for a tax break.

Martinez also proposes to revamp existing credits for small technology companies, potentially costing the state $2 million a year. One change would allow firms to collect a refund for some spending on research and development if their tax credits exceed their tax liability.