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NJ Aids Startups with Tech Tax Incentives

Governor Phil Murphy recently announced that the New Jersey Economic Development Authority (EDA) is offering two new tech tax incentives for the state’s established and start-up technology companies.

Incubator and Collaborative Workspace Rent Initiative

The first NJ tech tax incentive is through a new program, the Incubator and Collaborative Workspace Rent Initiative, which is designed to provide start-ups with rent assistance at incubators or other collaborative workspaces. Each qualified applicant is eligible for up to $15,000 in grants to cover two, four, or six months of rental payments. Additionally, if the applicant’s collaborative workspace is located in one of the state’s designated Opportunity Zones, is newly established, or is affiliated with a New Jersey university or hospital system, then the program will provide up to 3 months of bonus rent support for each category the applicant satisfies. Not only will the grants allow qualifying companies to free up capital to support their operations, but the program will also attract more tenants to NJ’s collaborative workspaces, which are designed to help entrepreneurs and start-up companies.

New Jersey Research and Development Tax Credit

The second incentive involves revitalizing NJ’s Research and Development tax credit (R&D credit). The credit has not undergone a major update since it was established in 1992 while the Federal R&D credit has seen significant positive changes and provided many opportunities to taxpayers. Last year, over 200 New Jersey companies received approximately $80 million in credits and the updated program is designed to benefit even more companies by increasing the number of available credits and the research activities that qualify for the credit.

These new incentives expand on the EDA’s established programs, such as the Technology Business Tax Certificate Transfer (NOL) Program, which allows technology and biotechnology companies to sell up to $15 million of their net operating losses and research and development credits for cash. Additionally, on Wednesday 7/25/2018, the EDA approved hiring a consulting firm to review NJ tech tax incentives with the intention of retaining business and attracting out of state investment. With these programs and increased focus on tax incentives, NJ is hoping to increase economic growth and remain at the forefront for attracting and supporting innovation-driven companies in the Garden State.

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

If you have questions regarding the above-mentioned EDA tech tax incentives or any related subject, please do not hesitate to contact Withum Life Science practice leader Taryn Bostjancic and Chris DeMayo practice leader of our Technology group, or, fill out the form below.

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