Signed into law by Governor Christie on January 31, 2013, the “Small New Jersey-Based High-Technology Business Investment Tax Credit” provides a refundable credit of up to 10% of a taxpayer’s “qualified investment” in a “New Jersey emerging technology business.”

A “qualified investment” is defined as a non-refundable investment of cash to an “unrelated” business (1) in exchange for stock, partnership or joint venture interests, licenses . . . or “similar” items, or (2) in connection with a purchase, production or research agreement.  A taxpayer who controls, directly or indirectly, 80% or more of the business is “related” to the business and is not permitted to claim the credit.”

A “New Jersey emerging technology business” includes any company that has fewer than 225 employees, 75% of whom work in New Jersey, and who has (1) qualified research expenses, (2) conducts pilot scale manufacturing or (3) conducts “technology commercialization” 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.

Taxpayers who make qualifying investments may claim a credit of up to $500,000 for each year and the program is subject to a $25 million annual cap.  For individual investors, the credit is first applied to Gross Income tax liability.  For corporate investors, the credit is first applied to Corporate Business Tax liability.  Credits are available for any tax period beginning on or after January 1, 2012.