The State of New Jersey offers a tax credit equal to 10% of a taxpayer’s qualified investment in a New Jersey emerging technology business. The definition of qualified investment has been expanded and now allows an investment in a holding company if the holding company in turn transfers the funds contributed by the taxpayer to an emerging technology business in New Jersey. If a corporation is an S corporation under New Jersey tax law, the corporation may pass the credit on to its shareholders based on their proportionate ownership. Both of these changes are retroactive to tax years beginning after 2011.
An emerging technology business is a company with fewer than 225 employees, with at least 75% of them work in New Jersey. The company must use qualified research expenses to pay for research conducted in New Jersey, conduct pilot scale manufacturing in the state, or conduct technology commercialization in the state in one of the following fields: i) advanced computing; ii) advanced materials; iii) biotechnology; iv) electronic device technology; v) information technology; vi) life sciences; vii) medical device technology; viii) mobile communications technology; or ix) renewable energy technology. The recent legislation added the category of carbon footprint reduction technology.