New $25 Million Angel Investor Tax Credit Program to Encourage Early Investment in New Jersey’s Innovative and Emerging Technology Businesses
Legislation signed into law on January 31, 2013 by New Jersey Governor Chris Christie promises to provide corporate business tax credits and gross income tax credits to angel investors for up to ten percent (10%) of a qualified investment in an emerging technology business with a physical presence in New Jersey that conducts research, manufacturing or technology commercialization in New Jersey. The maximum allowed tax credit shall be no more than $500,000 per investment per year. Qualified businesses will have no more than 225 employees, of whom at least seventy-five percent (75%) are filling a position in New Jersey, and must operate 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 law went into effect on January 31, 2013 and is effective for tax years beginning on or after January 1, 2011.
In order to have a qualifying investment, the investment must be a non-refundable transfer of cash to a New Jersey emerging technology business by a taxpayer that is not a related person (80% or more direct or indirect control) of a New Jersey emerging technology business, with the transfer of cash being in connection with either (1) a transaction in exchange for stock, interests in partnership or joint ventures, licenses (exclusive or non-exclusive), rights to use technology, marketing rights, warrants, options or any items similar to those included in the program, including, but not limited to, options or rights to acquire any of the items described above; or (2) a purchase, production or research agreement. A qualifying business also must meet one of the following work or research criteria in New Jersey: (1) have qualified research expenses paid or incurred for research conducted in New Jersey; or (2) conduct pilot scale manufacturing in New Jersey; or (3) conduct technology commercialization in New Jersey. The New Jersey Angel Investor Tax Credit Act is subject to an annual cap of twenty-five million dollars ($25,000,000) of issued tax credits.