Governor Phil Murphy signed into law A. 5687(Opens a new window) which establishes a new tax credit within the manufacturing space. This credit aims to advance capital investment within the manufacturing industry throughout the state. The credit will be administered through the New Jersey Economic Development Authority.

Credit Eligibility

Businesses are eligible for the credit if they make a capital investment into a qualifying New Jersey manufacturing facility totaling at least $10 million and create at least 20 jobs paying a minimum of 120% of the median manufacturing salary within the county in which the project is located. The jobs created under this program must be maintained throughout the project period, otherwise the business risks forfeiture of credit eligibility.

For purposes of this credit, capital investments include expenses such as site preparation, construction, renovation, and repair, including obtaining and installing machinery and equipment as well as improvements to site-related utilities. Capital investments generally do not include vehicles and heavy equipment that will not be permanently located in the building, structure, or facility of improvement.

In addition to the above, it should be noted that the business must agree to enter into a collaborative relationship with a qualified workforce hiring, training, or apprenticeship program with an approved New Jersey private or public educational facility.

Application Process

The application process will be handled by the New Jersey Economic Development Authority, which is currently seeking input on draft rules. Additional information about the application for the credit will be provided in the coming weeks.

Credit Amount

Each eligible business is entitled to a credit equal to the lesser of:

1. 0.1% of the business’s total capital investment multiplied by the number of qualifying new jobs;
2. 25% of the business’s total capital investment; or
3. $150,000,000

It should be noted that portions of any unused credit may be carried forward into the next 10 successive tax years. The credit will expire after this carry-forward period.

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Taxpayers should be aware of this opportunity for credit within the state if they wish to make a qualifying investment; eligibility will need to be closely examined throughout the credit approval process.