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Technology and Life Sciences: Tax Credit May Lower New Jersey Income Tax for Some Investors


Key Takeaways

  • In January, New Jersey Governor Chris Christie signed legislation reestablishing a tax credit for “angel investors.”
  • The Angel Investor Tax Credit allows up to a 10% credit that can be taken against certain New Jersey taxes for qualified investments in emerging technology businesses.

Synopsis:

On January 31, 2013, Governor Chris Christie signed legislation reestablishing a tax credit for “angel investors.” This credit can lower New Jersey corporation business and individual income tax burdens for investors in emerging technology businesses located in New Jersey.

Suggested Action:

Contact a CohnReznick tax professional to determine how this credit can benefit you.

Issue:

The Angel Investor Tax Credit allows up to a 10% credit that can be taken against certain New Jersey taxes for qualified investments in emerging technology businesses. The credit can be applied to either the corporation business tax or the gross income tax and is capped at $500,000 per qualified investment, with a $25,000,000 annual cap on the program statewide.

For an investment to be a “qualified investment,” the taxpayer must invest in an “emerging technology business” with a physical presence in New Jersey. The business cannot have more than 225 employees, and 75% of those employees must fill positions located in New Jersey. In addition, the business must operate in one of the following fields:

  • Advanced computing
  • Advanced materials
  • Biotechnology
  • Electronic device technology
  • Information technology
  • Life sciences
  • Medical device technology
  • Mobile communications technology
  • Renewable energy technology


The business must also meet one of the following conditions:

  • Has qualified research expenses paid or incurred for research conducted in New Jersey.
  • Conducts “pilot scale” manufacturing in the state.

Contact:

For more information, please visit the CohnReznick Technology and Life Sciences webpages and contact one of the following CohnReznick professionals:

  • Patrick Duffany, Partner and National Director of State and Local Tax Services, at 860-368-3607
  • Alex Castelli, Partner and Technology and Life Sciences Industry Practice Leader, at 703-744-6708

Circular 230 Notice: In compliance with U.S. Treasury Regulations, the information included herein (or in any attachment) is not intended or written to be used, and it cannot be used, by any taxpayer for the purpose of i) avoiding penalties the IRS and others may impose on the taxpayer or ii) promoting, marketing, or recommending to another party any tax related matters.

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