Tax Credits & Incentives for NJ Manufacturers

Manufacturing Investment Credits

Manufacturing Equipment Investment Tax Credit

Investments in manufacturing equipment may be eligible for a tax credit. The Manufacturing Equipment and Employee Investment Tax Credit is limited to 2% of the equipment investment up to a maximum allowed credit of $1 million (4% to manufacturers with 50 or less employees and a net income of less than $5 million). Unused tax credits in any year may be carried forward for up to seven years.

Manufacturing Employment Investment Tax Credit

Corporations who qualify for the Manufacturing Equipment Investment Tax Credit are automatically eligible for the accompanying two-year Employment Investment Tax Credit. This credit is limited to 3% of the equipment investment, not to exceed $1,000 per new employee added during each of the two years following the equipment investment. Unused tax credits in any year may be carried forward for up to seven years.

For more information on New Jersey’s Manufacturing Tax Credit Programs and to download the appropriate form visit http://www.state.nj.us/njbusiness/financing/tax/manufacuring.shtml.

Enterprise Zone Credits

Urban Enterprise Zone (UEZ) Investment Credit

Non-retail and non-warehouse corporations based in New Jersey’s UEZs are eligible for an 8% credit on zone-based investments. This credit is only available to corporations with less than 50 employees and zone-approved investments. A taxpayer cannot claim both the urban enterprise zone investment tax credit and the urban enterprise zone employment tax credit (see below) in the same year. This credit can be carried forward for a period of up to 20 years from either (a) the date of designation of the enterprise zone or (b) the date the corporation was first subject to the Corporation Business Tax.

Urban Enterprise Zone (UEZ) Employment Credit

UEZ-based businesses receive employment tax credits for hiring new, additional full-time employees. A credit of $1,500 is allowed for each new, additional full-time employee living in a UEZ municipality and who (a) immediately prior to employment by the taxpayer was unemployed for at least 90 days or (b) was dependent upon public assistance as the primary source of income.  For new, additional full-time employees not qualifying for the $1,500 credit, a credit of $500 is allowed if the employee lives in a UEZ municipality and was not employed in the UEZ municipality immediately prior to being hired.  Employees must be employed for at least six continuous months to earn the credit. This credit can be carried forward for a period of up to 20 years from either (a) the date of designation of the enterprise zone or (b) the date the corporation was first subject to the Corporation Business Tax.

For more information on Urban Enterprise Zone projects, locations, contact list and tax facts, visit  http://www.state.nj.us/njbusiness/locationdata/uez/.

Research Credits

Research and Development Tax Credit

Businesses claiming the federal research and development tax credit for a new or improved  product, process or software program qualify for the State’s Research and Development Tax Credit. It provides a credit of 10% of the excess research expenses over a base year amount plus 10% of basic research payments, as taken under the federal tax credit.  No recycling equipment credit, new jobs investment tax credit or manufacturing equipment and employment investment tax credit may be allowed for any property for which the research activities credit is allowed or that is included in the calculation of the research activities credit. Unused tax credits in any year may be carried forward for up to seven years, or in the case of certain high-tech industries, 15 years. Also, unused credits may be sold under the Tax Certificate Transfer program (see below).

More information on the Research and Development Tax Credit and to download the appropriate form to claim this credit, visit http://www.state.nj.us/njbusiness/financing/tax/science.shtml.

Tax Certificate Transfer Program

Technology and biotech companies with unused research and development tax credits and/or net operating losses can sell their tax losses to other NJ businesses for at least 75% of their value. This program is open to tech/biotech companies with less than 225 employees and at least 75% of employees working in NJ. Total tax certificate transfers are capped at $60 million per year.

For more information on the transfer program, visit the New Jersey Economic Development Authority's main Web site at www.njeda.com or contact Carol Hirth at 609-292-0346. You may also download the appropriate application and instructions by visiting http://www.state.nj.us/njbusiness/financing/tax/science.shtml.

Job Creation/Hiring Credits

New Jobs Investment

A credit is available for taxpayers who invest in new or expanded business facilities that create new jobs in NJ. The investment must create at least five new jobs for small or mid-size businesses (in 2007 defined by annual payrolls not exceeding $5.58 million and annual gross receipts not exceeding $11.36 million) and 50 new jobs for larger business taxpayers. New jobs must meet the minimum median annual compensation requirement of $38,350 in 2007.  Credit is calculated based on investment values multiplied by a new jobs factor ranging from 0.5% to 20%, depending on business size and number of new hires. Credits are taken over five years. New investment is not eligible for the credit unless the average value of all real and tangible personal property in the State has increased over the prior year.  Unused credits cannot be carried forward past the five-year credit period.

For more information on the New Jobs Investment Tax Credit and to download the appropriate form to claim this credit, visit http://www.state.nj.us/njbusiness/financing/tax/workforce.shtml.

New Jersey Redevelopment Authority Investments and Camden City Investments

New hire tax credits are available to businesses hiring in specific locations – Camden City and on projects associated with the NJ Urban Development Corporation (UDC). The UDC–related credit mirrors the UEZ employment credit described above ($1,500 per employee; two-year credit; resident of the city). The Camden City credit is a two-year credit equal to $2,500 in the first year and $1,500 in the second year. Unused Camden credits may be carried forward for five years.

For more information on the Redevelopment Authority Project Tax Credit and to download the appropriate form, visit http://www.state.nj.us/njbusiness/financing/tax/geographic.shtml.

Business Retention and Relocation Assistance Grants (BRRAG)

Corporations that (a) have operated in NJ for at least 10 years and (b) undertake a project to retain jobs in NJ are eligible for tax credits upon agreement to relocate and maintain a minimum of 250 retained full-time jobs from a location within New Jersey to a new location also within the State.  The credit is equal to $1,500 times the number of retained jobs. The tax credit allowed may not exceed 80% of the projected State tax revenues from retained full-time employees.  Businesses that relocate a minimum of 500 full-time employees will be issued the tax credit immediately upon entry of the project agreement between the business and State government.  Relocation of a business that retains between 250 and 499 full-time employees will not be issued the credit until the end of the fiscal year in which the application is approved.  Furthermore, a bonus credit of 50% of the amount of the original tax credits will be awarded to any business that relocates more than 2,000 full-time employees.  Total value of tax credits may not exceed $20 million in any given fiscal year.

To learn more about the Business Retention and Relocation Assistance Grant, contact Lauren Moore at the New Jersey Commerce Commission, 609-292-3863, or visit http://www.state.nj.us/njbusiness/financing/incentive/beip_brrag.shtml.

To download the appropriate application for the Business Retention and Relocation Assistance Grant, visit http://www.state.nj.us/njbusiness/forms/BRRAG_application_1_18_08_PM.doc.

Employment of Disabled Individuals

Businesses employing disabled individuals at or under the supervision of a sheltered workshop facility under contract with the State are eligible for a tax credit equal to 20% of the wages and salary paid to the disabled employee, not to exceed $1,000 per person.  Unused credits may be carried forward for up to seven years.

For more information, contact the Department of Labor and Workforce Development at 609-292-6600. To download the appropriate forms, visit http://www.doleta.gov/business/incentives/opptax/.

Environmental Credits

Wastewater Equipment

Corporations that purchase treatment or conveyance equipment for use in (a) the treatment or (b) transportation of wastewater for reuse in an industrial process exclusively within NJ are eligible for a tax credit.  The credit is equal to 50% of the cost of the treatment equipment or conveyance equipment. The amount of credit used in any one year cannot exceed 20% of the amount of the total credit allowable.  Any unused credit may be carried forward without limitation.

To learn more about this credit, contact the NJ Department of Environmental Protection Commissioner Lisa Jackson at 609-292-2885 or visit their Web site at www.state.nj.us/dep/commissioner/index.html.

To download the Effluent Equipment Tax credit form to claim your credit, visit http://www.state.nj.us/njbusiness/financing/tax/enviromental.shtml.

Contaminated Site Remediation Costs

Corporations that performed qualified environmental remediation during 2004, 2005 and 2006 are eligible to receive a tax credit equal to 100% of the funds used in the remediation project. Corporations must bear no responsibility for the contamination, the site must be in a metropolitan or suburban area and the remediated site must be expected to generate business activity. Unused credits may be carried forward for the five years following the year of the cleanup.

To learn more about the Remediation Tax Credit and to download the appropriate form, visit http://www.state.nj.us/njbusiness/financing/tax/enviromental.shtml.

Economic Development Credits

Neighborhood Revitalization

Businesses that provide funding to a State-approved nonprofit organization for a redevelopment project that is part of the neighborhood revitalization plan are eligible to receive a tax credit against taxes imposed on the entire net income of the (a) corporation business tax, (b) insurance premiums tax, (c) marine insurance company tax, (d) utility excise tax and (e) petroleum products gross receipts tax.  The credit is equal to 100% of the approved assistance provided by the business entity, and may not exceed $1 million for any given tax year.  Only redevelopment projects in Urban Enterprise Zone (UEZ) communities are eligible for the credit. The total of all assistance approved on behalf of a nonprofit organization per project may not exceed $10 million.

To learn more about the Neighborhood Revitalization Tax Credit, contact Janis Goldstein at 609-292-6831 or visit the NJ Department of Community Affairs main Web site at http://www.state.nj.us/dca/dcr/nrtc.

To download the Neighborhood Revitalization Tax Credit form, visit http://www.state.nj.us/njbusiness/financing/tax/geographic.shtml.

Transportation Credits

Smart Moves for Business Program

Corporations that register with the New Jersey Department of Transportation and have an authorized plan to provide commuter transportation benefits, in addition to and not in lieu of compensation, may claim a tax credit based on the business’ direct expenditures attributed to the plan. The amount of the credit is equal to 10% of the cost of implementing and operating the plan during the reporting period with a per-employee maximum that is adjusted for inflation annually.  For the 2007 period, the maximum per employee amount is $141.

To learn more about the Smart Moves for Business Program, visit the NJ Department of Transportation's main Web site at www.state.nj.us/transportation/commuter/smartmoves.

To download the appropriate Smart Moves for Business Program Ride Share Tax Credit form, visit http://www.state.nj.us/njbusiness/financing/tax/workforce.shtml.