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Update on the Angel Investor Credit

On July 14, 2021, the New Jersey Economic Development Authority (NJEDA) Board amended the state’s Angel Investor Tax Credit Program. The amendments arose from modifications made to the program by both the Economic Recovery Act of 2020 and legislation signed into law by Governor Phil Murphy in 2019.

The NJ Angel Investor Tax Credit Program was created in 2013 to incentivize investment into emerging NJ technology businesses by providing a refundable tax credit equal to a percentage of their qualified investment made in a NJ early-stage company. For more information on the NJ Angel Investor Tax Credit Program please refer to our previous articles.

Significant amendments approved on July 14, 2021 include:

  • Increasing the amount of tax credits available annually under the program from $25 million to $35 million.
  • Expanding the definition of a qualified investment to include investment commitments made into qualified venture funds. To be a qualified venture fund, the fund must invest a minimum of 50% of the venture fund’s committed capital NJ based businesses.

As a reminder, the following additions to the program arising from the 2019 legislation have already been implemented effective January 1, 2020:

  • Increasing the amount of tax credits available per qualified investment in an emerging NJ technology business from 10% to 20%.
  • Adding a 5% bonus credit for qualified investments made in a NJ certified minority or women owned technology business or a technology business located in a Qualified Opportunity Zone or New Markets Tax Credit Census Tract.

The amendments to the program were approved in effort to expand the assistance to early-stage companies so they can further their research and development or manufacture their technology. Qualified investors should be proactive as the program only allows 6 months from the date of investment to submit an application.

Authors: Amanda Voorman | avoorman@withum.com, Lenny Smith | lenny.smith@withum.com

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