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Don’t Miss it! New Jersey’s Angel Investor Tax Credit Program Expansion in Effect as of January 1, 2020

On June 30, 2019, Bill Number A5604, was approved by the State of New Jersey to expand the New Jersey Angel Investor Tax Credit from 10% to 20% of a qualified investment, with an additional 5% bonus available for investments in a business located in a qualified opportunity zone, low-income community, or a business that is certified by the state as minority or woman-owned.

This increase took effect immediately and applies to qualified investments made during privilege periods and taxable years beginning on and after January 1, 2020.

The New Jersey Angel Investor Tax Credit is administered by the New Jersey Economic Development Authority (NJEDA). Each calendar year $25 million of Angel Investor Tax Credits may be approved and distributed to taxpayers. Over $530 Million in investments have been leveraged through the program since it was introduced in 2013.

The credit is available to investors, including nonresidents, if their ownership was less than 80% prior to investment. Investors are not limited to individuals, as corporation and passthrough entities are eligible for the credit as well. The Credit is also refundable for all investors except corporate investors, who may carryforward any unused credit for 15 years.

For more information or questions about the tax credit program, please contact a member of the Tax Services Group.

Does Your Investment Qualify?

To be considered an eligible New Jersey emerging growth life science and technology company, the business must:

  • Employ fewer than 225 full-time employees, at least 75% of whom work in New Jersey
  • Do business, employ or own capital/property, or maintain an office in New Jersey
  • Conduct at least one of the following activities in New Jersey:
    • Incur qualified research expenses in the State
    • Conduct pilot scale manufacturing in the State
    • Commercialize one or more of the following eligible technologies in the State: Advanced Computing, Advanced Materials, Biotechnology, Electronic Devices, Information Technology, Life Sciences, Medical Devices, Mobile Communications, and Renewable Energy Technology.
  • Have as its primary business an eligible technology (as listed above)

Don’t Wait!

Investing taxpayers have only six months from the date of investment to submit an application to the New Jersey Economic Development Authority and then must comply with all provisions of the Program.

Author: Gianluca Panarelli, CPA, MST | gpanarelli@withum.com

Life Sciences Services

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