New Jersey is granting additional flexibility to suburban offices, allowing them to retain state tax breaks even if employees only work on the premises twice a week. This program is shifting to be more inclusive towards hybrid work environments.
Companies previously participating in tax incentive programs had to demonstrate that workers spent at least three days (60%) of their time in-office to preserve their tax credits. Governor Phil Murphy recently signed a bill into law that lowers this requirement to two days (40%) of their time in-office for suburban-based employers.
The bill applies to the following four tax incentive programs:
- The Business Employment Incentive Program
- The Business Retention and Relocation Assistance Grant Program
- The Grow New Jersey Assistance Program
- The Urban Transit Hub Program
Effective for the tax period beginning April 1, 2024, businesses located outside enhanced areas or government-restricted municipalities that have entered into an incentive agreement may modify the agreement by electing the following:
- Full-time workers employed by the business must spend at least two days (40%) of their time working on the premises.
- The business must extend its commitment period by two years beyond the time set forth in the incentive agreement.
- The business will make a nonrefundable payment equal to 10% of the maximum tax credit it may receive to the New Jersey Economic Development Authority (NJEDA).
To alleviate concerns regarding city centers still recovering from the pandemic, businesses located in urban areas are not included in this new bill. They are still required to have workers in-office three days (60%) a week, or they risk losing their incentives.
Please contact your WG advisor if you have questions about this or any other tax matter.
