New Law Allows Tax Credits for Investments in Businesses Working to Fight Climate Change
Legislation Assemblyman Andrew Zwicker sponsored to encourage innovation among New Jersey small and mid-size businesses working to fight climate change is now law.
The new law (A-3631) amends the “New Jersey Angel Investor Tax Credit Act” to include investments in businesses that conduct technology commercialization in carbon footprint reduction technology. The act allows a tax credit equal to 10 percent of the qualified investment against the corporation business tax and the gross income tax for qualified investments in a New Jersey emerging technology business.
“Our state can – and should – take advantage of opportunities to grow our economy and stem the tide of climate change at the same time,” said Zwicker (D-Hunterdon/Mercer/Middlesex/Somerset). “Incentivizing investments in carbon footprint reduction technology ultimately will allow New Jersey to reduce emissions and create green jobs.”
The New Jersey Economic Development Authority defines a “New Jersey emerging technology business” as a company with fewer than 225 employees that is doing business, employing or owning capital or property, or maintaining an office in this state and has qualified research expenses paid or incurred for research conducted in New Jersey, conducts pilot scale manufacturing in New Jersey, or conducts technology commercialization in New Jersey in the fields of advanced computing, advanced materials, biotechnology, electronic device technology, information technology, life sciences, medical device technology, mobile communications technology, renewable energy technology or, as of the enactment of the new law, carbon footprint reduction technology.
The new law also expands eligibility for tax credits to include investments in the holding company of an emerging technology business, thus allowing indirect investment in a qualified business through the holding company that controls it. Previously, the law barred investments in holding companies from eligibility for the program.
“Regardless of whether an investment goes directly to a business or first goes to a holding company that then transfers funds to the business, it’s supporting economic growth and job creation in New Jersey,” said Zwicker. “Eliminating this distinction will encourage investors who may not otherwise put money into an emerging technology business to consider funding these ventures.” The governor signed the measure into law on Monday.