"Angel" investors can receive a new tax credit for
investments in New Jersey emerging technology companies.
Under the New Jersey Angel Investor Tax Credit Act (the
"Act"), angel investors -- wealthy corporate or
individual taxpayers who invest cash in high-risk startups -- can
defray New Jersey corporation business or gross income taxes for
privilege periods or taxable years beginning on or after January 1,
2012. The new legislation, signed by the governor on January 31,
provides for a tax credit of up to 10 percent of angel
investors' qualified investment in New Jersey emerging
technology companies with fewer than 225 employees, where at least
75 percent of those positions are located in New Jersey.
The maximum credit allowed to a taxpayer in any tax year is
$500,000. The state will refund excess credit to an individual
taxpayer. A corporate taxpayer can choose to either receive a
refund of excess credit or carry over the excess credit for 15
years. The New Jersey Economic Development Authority in
consultation with the Director of the Division of Taxation will
approve taxpayer applications for the credit. There is a $25
million cap annually on all credits that the Economic Development
Authority will approve.
The Act is aimed at spurring New Jersey job creation,
technological innovation and corporate growth. Qualifying
investments must be made in emerging technology companies that are
involved in technology research, manufacturing or sales within the
state. Specifically, recipient companies must have research
expenses paid or incurred for research conducted in New Jersey,
conduct pilot scale manufacturing in New Jersey or conduct
technology commercialization in New Jersey in the fields of
advanced computing, advanced materials, biotechnology, electronic
device technology, information technology, life sciences, medical
device technology, mobile communications technology or renewable
energy technology.
The Act is designed to incentivize private investment in New
Jersey's emerging technology entrepreneurial businesses.
Although he vetoed a similar bill in 2011, Gov. Christie praised
the new legislation for securing New Jersey's leadership in
industries such as pharmaceuticals, life sciences and information
technology, as well as for creating high-skill, high-wage jobs that
flow from those industries. Supporters of the Act believe that
focusing investment on startups in these fields will be important
for the state's future and that the program will also help
reduce New Jersey's unemployment rate, which is currently
approximately 2 percent above the national average of 7.8 percent
and is the fourth-highest in the country.
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