The New Jersey Economic Development Authority (NJEDA) recently announced that 2020 applications for its Angel Investor Tax Credit Program nearly tripled the previous annual average of the program. 2020 also marked the first time the program reached its funding cap of $25 million. Governor Murphy recently signed legislation increasing this cap to $35 million for the 2021 program year and moving forward.
2020 was also the first year that investors could take advantage of Bill Number A5604 which was approved in 2019 and expanded the Angel Investor Tax Credit from 10% to 20% of a qualified investment. An additional 5% is also available as a bonus for investments made in a business located in a qualified opportunity zone, low-income community, or a business that is certified as minority or woman-owned.
The program helps funnel investments to New Jersey-based technology businesses with a significant presence in the state who are active in conducting research, manufacturing, or commercializing technologies. In 2020 the NJEDA approved 142 applications through the Angel Investor Tax Credit Program, representing an injection of $35.8 million into 21 New Jersey companies and support of 348 jobs in total. The $35.8 million figure is a $2.7 million increase from 2019.
The Angel Investor Tax Credit Program is available to investors, including nonresidents, if their ownership was less than 80% prior to investment. Investors are not limited to individuals, as corporations and pass-through entities are eligible for the credit as well. The Credit is also refundable for all investors except corporate investors, who may carry forward any unused credit for 15 years.
Qualified investors should be proactive as the program only allows 6 months from the date of investment to submit an application. For additional information on the credit please refer to one of our previous articles outlining the program’s eligibility requirements and benefits.
contact a member of the Tax Services Group.
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