On January 7, 2021, Governor Murphy signed the New Jersey Economic Recovery Act of 2020 (the “Act”) into law. The Act introduces nine new generous tax incentives and amends four pre-existing tax incentives with the intent to further support New Jersey’s economic recovery.
New incentives by industry:
Real Estate:
- Historic Property Reinvestment Act provides tax credits for part of the cost of rehabilitating historic properties in the state, with a cap of $50 million annually for six years.
- Brownfields Redevelopment Incentive Program Act provides tax credits to compensate developers of redevelopment projects located on brownfield sites for remediation costs, with a cap of $50 million annually for six years.
- The New Jersey Aspire Program Act provides incentive awards to reimburse developers for gap financing costs on development projects that would “not be economically feasible” without such reimbursement. This program targets commercial and residential projects that focus on mixed-use, transit-oriented development and affordable housing in distressed communities
Manufacturing:
- Personal Protective Equipment Program provides tax credits for new hires if the job is related to the manufacturing of personal protective equipment. Up to $10 million annually for three years has been allocated.
Food Retail:
- Food Desert Relief Act provides tax credits (and in some cases, grants or loans) to incentivize businesses to establish and retain new supermarkets and grocery stores in food desert communities, with a cap of $40 million annually for six years.
Other:
- New Jersey Community-Anchored Development Act provides tax credits to anchor institutions to encourage the expansion of targeted industries in New Jersey and the continued development of certain areas of the State, with a cap of $200 million annually for six years. The state is specifically looking at those institutions with strong community ties which employ workers in education, healthcare, culture, and community/economic development.
- Emerge Program Act provides tax credits to encourage economic development, job creation, and the retention of jobs in imminent danger. This program specifically targets businesses that build, acquire, or lease space in the state with plans to create or retain full-time jobs.
- Main Street Recovery Finance Program Act provides $50 million for grants, loans, loan guarantees, and technical assistance to small and micro businesses.
- New Jersey Innovation Evergreen Act allows qualified venture firms to purchase tax credits for cash at an auction, which may then be used to invest in innovation programs designed to advance the competitiveness of the state. Up to $60 million annually for six years has been allocated.
Amended Incentives:
- Film and Digital Media Tax Credit Program increased annual cap by $220 million for the next thirteen years.
- Economic Redevelopment and Growth Grant Program’s budget increased by $220 million.
- New Jersey Emerging Technology and Biotechnology Financial Assistance Program annual cap of State-administered sale of tax benefits increased by $15 million, and the maximum lifetime value of surrendered tax benefits that a corporation shall be permitted to surrender pursuant to the program increased by $5 million.
- Angel Investor Tax Credit Act increased annual cap by $10 million. Additionally, this tax credit has been expanded to include investments into a qualified venture fund.
These programs are administered by the NJ Economic Development Authority and are independently monitored by the newly created Economic Development Inspector General. Taxpayers seeking tax credits or other incentives offered by these programs must comply with requirements pursuant to each program’s unique rules. It is important that qualifications are discussed with your WG tax advisor prior to the submission of any application as there are non-refundable fees associated with each program.
Since the legislation has recently passed as of the date of publishing this article the NJEDA portal has not yet been updated which serves as a great resource for all program details, qualifications, and benefits.
