What tax credit programs are available to New Jersey businesses?
Recent Regulations and Resources
Division of Taxation’s Corporation Business Tax Credits and Incentives https://www.state.nj.us/treasury/taxation/cbt-creditlist.shtml
Manufacturing Equipment and Employment Investment Tax Credit Program http://www.state.nj.us/treasury/taxation/pdf/current/cbt/305.pdf
Available from the NJ Division of Taxation, the Manufacturing Equipment and Employment Investment Tax Credit provides a credit against corporation business tax liability for investments in certain manufacturing equipment and for certain increased employment. The manufacturing equipment portion of the credit is limited to 2 percent (4 percent for companies with 50 employees or less) of the net cost of qualified equipment up to a maximum allowed credit of $1 million. The employment investment portion of the credit is computed for each of the two succeeding years following the year a credit is allowed for the equipment investment. The tax credit in these years is limited to 3 percent of the net cost of qualified equipment, not to exceed $1,000 per job created directly related to the equipment.
Research and Development Tax Credit
Available from the NJ Division of Taxation, the R&D Tax Credit provides a credit for increased research activities based on qualified expenditures. This credit is calculated in the same manner as the federal tax credit for increasing research activities. It provides a credit of 10 percent of excess qualified research expenditures over a base amount, plus 10 percent of basic research payments. For periods beginning on or after January 1, 2012, the amount of the credits applied cannot reduce the tax liability to an amount less than the statutory minimum tax.
Urban Enterprise Zone Tax Credit https://www.state.nj.us/treasury/taxation/pdf/cbt/2008/300.pdf
Available through the NJ Division of Taxation, a one-time credit of $1,500 is allowed for each new full-time, permanent employee who resides in any municipality which contains a zone, and immediately prior to employment by the qualified business was unemployed for at least 90 days or dependent upon public assistance as the primary source of income. A one-time credit of $500 is allowed for new full-time permanent employees who do not meet the qualification for the $1,500 tax credit, but are residents of any municipality in which a designated enterprise zone is located, and were not employed at a location within the qualifying municipality immediately prior to employment by the qualified business. The credit is available only for new full-time permanent employees who have been employed by the qualified business for at least six continuous months during the year for which the credit is claimed. For a new employee to be considered a full-time permanent employee, the total number of full-time permanent employees, including the new employee, employed by the qualified business during the calendar year must exceed the greatest number of full-time permanent employees employed in the zone by the qualified business during any prior calendar year since the zone was designated.
In lieu of / Alternate Urban Enterprise Zone Tax Credit
Available through the NJ Division of Taxation, there is an alternate method by which a zone business may be qualified, even though it is unable to increase its full-time permanent employment, if the business has fewer than 50 employees and was in business in the zone at least one year prior to designation of the zone. This business may be certified for one year by entering into an agreement with the zone city to make an expenditure, approved by the UEZ Authority, which contributes substantially to the economic attractiveness of the zone. The expenditures must be at least $5,000 for a business with 10 or fewer employees, with an additional $500 per employee up to the maximum of 49. The corporation is entitled to an 8% investment credit against the Corporation Business Tax for the tax year in which the expenditure is made. The credit may be carried over.
Purchasing Tax Credits
The Technology Business Tax Certificate Transfer Program enables qualified, unprofitable NJ-based technology or biotechnology companies with fewer than 225 US employees (including parent company and all subsidiaries)to sell a percentage of net operating losses (NOL) and research and development (R&D) tax credits to unrelated profitable corporations. Learn more about the program at https://www.njeda.com/activeprograms.