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Tax Credits & Incentives - New Jersey


The following listing provides information on a variety of select business incentives, some of which are tax credits or exemptions while others are non-tax incentives.

 

Utility Rate Reductions

Telecommunication public utilities may take up to $5 million credit against the entity corporate business tax liability for the advance payment of utilities franchise/gross receipts taxes paid in 1997, the final year that such entities were subject to those taxes. The advance payment would have been recorded as an asset on their books.

Credit for High Technology Companies

The credit is for 10% of any qualified investment made by them in a small New Jersey-based high-technology business; maximum credit allowed per tax year for each qualified investment will be $500,000. Corporate entities allowed a credit in each of three successive tax years beginning on or after January 1, 1999. The business must have fewer than 225 employees, of whom 75% must be New Jersey based employees filling jobs within the state. This unused credit may be carried over for 15 years.

Credits for Qualified Employment Opportunities

New Jobs Investment Tax Credit
Corporate entities are entitled to a credit against the portion of their corporation business tax liability that is attributable to their qualified investments, through direct ownership or by lease, in buildings, building components, equipment and capitalized start-up costs, in any new or expanded business facility in New Jersey. The credit is for 0.5% to 10% depending on the number of new jobs created and the size of the business taking the credit.

Employment Investment Tax Credit
Taxpayers allowed the credit for investment in qualified manufacturing equipment are also allowed a credit based on the increase in employment by the taxpayer in the two tax years following the investment. Form 305-A, Manufacturing Equipment and Employment Investment Tax Credit, is used to calculate the credit. Limits apply and unused credit may be carried over for seven years.

Business Retention and Relocation Credit
A credit against the corporation business tax (or insurance premiums tax) is provided for retention of jobs in New Jersey. To qualify for a grant of tax credits, a business must demonstrate that the receipt of assistance will be a material factor in the business' decision not to relocate outside of New Jersey. A business that relocates 1,500 or more retained full-time jobs covered by a project agreement from outside of a designated urban center to one or more new locations within a designated urban center will not be required to make such a demonstration if the business applies for a grant of tax credits within six months of signing its lease or purchase agreement. Only non-retail facilities projects are eligible for a grant of tax credits. The maximum tax credit available is equal to $1,500 times the number of retained full-time jobs.

Urban Transit Hub Credit
A business, upon application to and approval from the New Jersey Commerce Commission, may claim a credit of 100% of its capital investment in a qualified business facility within an eligible municipality. The taxpayer must make or acquire capital investments of at least $75 million in a qualified business facility at which the business must employ at least 250 full-time employees.The credit must be taken over a 10-year period, at the rate of 10% of the total amount of the business' credit for each tax accounting or privilege period.

Credit for Employing Severely Handicapped Persons
A taxpayer is allowed a credit against the corporation business tax in an amount equal to 20% of the salary and wages paid by the taxpayer during the privilege period for the employment of a qualified person, but the credit may not exceed $1,000 for each qualified person for the privilege period. This credit, when taken together with any other credit allowed against the corporation business tax, cannot exceed 50% of the taxpayer's tax liability, and cannot reduce the taxpayer's total tax liability below the statutory minimum. The unused credit may be carried over for seven years.

Film Production Credit

A credit is allowed in an amount equal to 20% of a taxpayer's qualified film production expenses during a privilege period, provided that at least 60% of the taxpayer's total production expenses, exclusive of post-production costs, will be incurred for services performed and goods used or consumed in New Jersey.

Digital Media Content Production

The New Jersey Statutes also provide a credit for up to 20% of qualified digital media content production expenses, provided that at least $2 million of the taxpayer's total digital media content production expenses will be incurred for services performed and goods used or consumed in New Jersey, and most of those expenses will include wages and salaries paid to one or more new full-time employees in New Jersey.

Manufacturing Equipment Tax Credit (Small Business Provisions)

The manufacturing equipment tax credit is equal to 2% of the investment credit base of qualified equipment placed in service in the tax year, up to a maximum credit of $1 million. For equipment placed in service during privilege periods beginning on or after July 1, 2004, the credit is equal to 4% of the investment credit base, up to a maximum credit of $1 million, if the taxpayer has 50 or fewer employees and entire net income of less than $5 million for the tax year. Form 305-A, Manufacturing Equipment and Employment Investment Tax Credit, is used to calculate the credit. Unused credits are carried forward for seven years.

Research and Development

Corporate entities are allowed a credit against the corporation business tax for qualified expenditures with respect to research conducted in New Jersey. The amount of the credit allowed equals 10% of the excess of the qualified research expense for the fiscal or calendar year over a base amount and 10% of the basic research payments. Corporate entities are required to use certain tax credit available to them prior to using the research expenses tax credit. The research expenses credit may not reduce the entity's annual business corporation tax liability below 50% of the amount otherwise due for the tax year or below the fixed dollar minimum tax. Unused research and development credits may be carried forward for up to seven years.

Transportation Programs

Commuter transportation benefits credit. A corporation may claim a credit against the corporation business tax for providing commuter transportation benefits to employees if those benefits are provided in addition to, and not in lieu of, compensation.

Enterprise Zone Credits

Urban enterprise zone credits- Qualified businesses are entitled either to a one-time enterprise zone employee credit or an enterprise zone investment credit. Corporate entities may not claim the employee credit and the investment credit in the same year.

Investment Credit

A qualified business that meets the eligibility criteria of N.J. Rev. Stat. §52:27H-86(c) may receive a one-time credit in an amount equal to 8% of each new investment made by the qualified business in the enterprise zone under an agreement approved by the New Jersey Urban Enterprise Zone Authority. The minimum annual investment for businesses that employ 10 or less employees is $5,000.

Employee Credit

Those qualified businesses that are actively engaged in conducting a primarily manufacturing, non-retail sales or non- warehousing-oriented business at a location within an enterprise zone are entitled to take a one-time urban enterprise zone employee tax credit against its corporation business tax liability. A one-time employee tax credit of $1,500 is allowed for each new full-time, permanent employee employed at a business location within an urban enterprise zone provided that employee for whose the credit is claimed is a resident of any qualifying municipality in which an urban enterprise zone is located and was either unemployed for at least 90 days or was dependent upon public assistance as his or her primary source of income immediately prior to being employed by the qualified business. The employee tax credit may not reduce an entity's corporation business tax liability by more than 50% of the amount otherwise due. Any unused credit may be carried forward to the next year.

Urban Development Project Employee Tax Credit

Any corporate entity actively engaged in business at a location that is the subject of an industrial, land-use improvement, civic, utility, mixed-use or multi-purpose improvement project may qualify for a special credit against its corporation business tax liability if the business at that location is primarily a manufacturing, non-retail sales or non- warehousing-oriented business. The tax credit cannot exceed 50% of the taxpayer's tax liability otherwise due, and cannot reduce the total tax liability below the statutory minimum. Form 302 must be attached to the corporation business tax return in order to obtain the credit.

Credit for Taxpayer not Receiving Benefit Under Urban Enterprise Zone Act

A taxpayer that is engaged in the conduct of business within a qualified municipality and that is not receiving a benefit under the New Jersey Urban Enterprise Zones Act, may apply to receive a tax credit against the amount of tax otherwise imposed under the Corporation Business Tax Act equal to $2,500 for each new full-time position at that location in credit year one and $1,250 for each new full-time position at that location in credit year two.

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