NJ Public Law 2013, Chapter 14 was signed into law on January 31, 2013 and effective for privilege periods and taxable years, as appropriate, beginning on or after January 1, 2012. This new law, cited as the "New Jersey Angel Investor Tax Credit Act
,” revives the expired Small New Jersey-based High Technology Business Investment Tax Credit by establishing credits against corporation business and gross income taxes for individuals or entities investing in New Jersey emerging technology businesses.
In order to encourage and spur investment and growth in New Jersey's emerging technology businesses, the New Jersey Angel Investor Tax Credit Act was enacted into law on January 31, 2013.
If all the requirements are satisfied, then businesses and individual investors will be able to take a credit against their corporate or gross income tax of up to 10%of their investment.
The investment must be a "qualified investment"
, which is a non-refundable transfer of cash to a New Jersey emerging technology business or a qualified investment as follows:
- A transaction in exchange for stock
- Interest in partnerships or joint ventures
- Licenses (exclusive or non-exclusive)
- Rights to use technology
- Marketing rights
- Warrants or options
- Purchase, production or research agreement
The investment must be made in a "New Jersey emerging technology business
" which is defined as a business which has fewer than 225 employees of whom at least 75 percent are in a position located in New Jersey and will operate in the fields of advanced computing, advanced materials, biotechnology, electronic device technology, information technology, life sciences, medical device technology, mobile communications technology, or renewable energy technology. Furthermore, the investment should be incurred for qualified research expenses in New Jersey or will conduct pilot scale manufacturing or technology commercialization in New Jersey.
The credit is subject to a maximum limitation of $500,000 per year for each qualified investment and the total benefits available under this program are subject to an overall limitation of $25,000,000 per year for all participants. Furthermore, the credit is effective for investments made on or after January 1, 2012.