A measure sponsored by Assembly Democrats Annette Quijano, Gary Schaer, Nelson Albano and Wayne DeAngelo to boost emerging technology businesses that can create jobs and economic growth for New Jersey has gained final legislative approval by both houses. The bill was approved in the Assembly by a vote of 45-31.
The bill (S-2454/A-3592), known as the New Jersey Angel Investor Tax Credit Act, is part of the Democratic-led Back to Work NJ plan to create jobs and economic development.
Angel investments are investments by wealthy individuals into high-risk start-up ventures.
“Start-up firms receiving such capital have a significantly higher rate of survival, faster growth and superior access to fundraising than early-stage firms devoid of angel financing,” said Quijano (D-Union). “It’s in New Jersey’s best interest to encourage angel investors to examine and invest in technology start-up businesses, as successful start-ups create jobs, generate wealth and enhance the overall well-being in the state.”
“These types of investors can play a vital part in New Jersey’s economic recovery,” said Schaer (D-Passaic/Bergen/Essex). “Some angel investors do not just invest in, but also mentor, coach and assist promising start-up enterprises. This is just the kind of program we need to fill the gaps and help create new jobs and economic development throughout our state.”
“This effort is all about jobs and economic development,” said Albano (D-Atlantic/Cape May/Cumberland). “Encouraging this type of investment will go a long way toward jumpstarting our economy and positioning New Jersey as an unquestioned leader in high technology industries.”
“Plans like this that encourage a strong business environment ultimately benefit New Jersey’s hard-working men and women,” said DeAngelo (D-Mercer/Middlesex). “A vibrant business community means better, higher-paying jobs for our working class residents.”
The bill establishes credits against corporation business and gross income taxes for investing in New Jersey emerging technology businesses.
Subject to certain limitations, the corporation business and gross income tax credits would equal 10 percent of a taxpayer’s qualified investment in an emerging technology company with fewer than 225 employees, of whom at least 75 percent are filling a position in New Jersey.
Purchase, production and research agreements would qualify as creditable investments.
The program is subject to a $25 million annual cap.
Also, tax credit recipients cannot claim tax credits for that part of an investment in a single company that exceeds $500,000.
If the tax credit amount exceeds a gross income taxpayer’s tax liability, the state will issue a refund to the taxpayer in the amount of the excess, while a corporation business taxpayer may choose between having the amount of the excess refunded or carried forward to be applied against tax liabilities in the next 15 years.