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Expansion of the New Jersey’s Angel Investor Tax Credit

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% or 25% based on the investment. The New Jersey Angel Investor Tax Credit is administered by the New Jersey Economic Development Authority (NJEDA) and is available to investors, including nonresidents, as long as their ownership was less than 80% prior to investment. Additionally, investors are not limited to individuals, as corporation and passthrough entities are eligible for the credit.

The credit is available to non-New Jersey residents, including foreign investors, and is a refundable credit. Although not refundable for corporate investors, they may carryforward any unused credit for 15 years. Read the full bill here.

Details on the Requirements of this Incentive

Since the inception of the incentive, qualified investments were entitled to a 10% credit on the investment up to $500,000. With the passing of this new bill, qualified investments into emerging technology companies are now entitled to a 20% credit on the investment up to $500,000, doubling the incentive. However, the credit shall be 25% for the following investments in emerging technology companies they satisfy one the following:

  • Are located in a qualified opportunity zone pursuant to the newly defined federal designation under IRC Section 1400Z-1
  • Are located in low-income community areas pursuant to IRC Section 45D, or
  • Are certified by the State as a minority business or a woman-owned business

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

The NJEDA shared updated information on the expanded benefits and noted the Angel Investor Tax Credit Application submission deadline of October 20, 2019. Applications submitted after this date will have consideration for approval for the calendar year 2020.

For more information regarding this NJEDA tax incentive or any other state incentives, please do not hesitate to contact Withum’s State Incentive team leader, Shawn Henderson, Life Science practice leader, Taryn Bostjancic,  Zsia Rosmarin, team leader of our Technology group, or, fill out the form below.

Author: Shawn Henderson, CPA  |  shenderson@withum.com

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