Do you own a business in the Garden State? One of the advantages of doing business in New Jersey is the state’s plethora of business tax credits and incentives. Whether you need motivation to create new jobs or invest in a growth project, New Jersey has options for you.
Here are the state’s business tax credits, incentives, and exemptions, broken down by category:
Quick Links
Thinking of starting a new Garden State business? Here’s what you need to know about starting and running a business in New Jersey.
New Jersey business tax incentives
Hiring and/or expansion incentives
Economic Recovery Tax Credit
The Economic Recovery Tax Credit encourages businesses to expand their operations in qualified New Jersey municipalities. Businesses that hire new employees in certain areas of the state can receive a credit of $2,500 per new full-time position added in year one and $1,250 for each new full-time position added in year two.
The maximum credit can’t exceed 50% of a business’s tax liability. See the credit application here.
Emerge Program
The Emerge Program incentivizes businesses to create and retain well-paying jobs and invest in growth projects in targeted areas across the state. Depending on the location and particulars of the project, businesses that meet the requirements can receive between $500 and $4,000 per new job created or retained.
Business owners can use their tax credits to offset their corporate business tax or insurance premiums tax. To qualify, businesses need to meet the following key criteria:
- Undertake a project that creates at least 35 new full-time jobs (this requirement can be lower for small businesses and businesses engaged in targeted industries, like advanced manufacturing, aviation, and finance)
- Be located in an eligible incentive location
- Meet minimum capital investment requirements
- Ensure that at least 80% of employees’ work time is spent in New Jersey and 80% of the withholdings of new or retained full-time jobs are subject to the New Jersey Gross Income Tax Act
Get additional details on the Emerge Program here.
New Jobs Investment Tax Credit
New Jersey’s New Jobs Investment Tax Credit incentivizes businesses to invest in business expansion or growth projects that create new, well-paying jobs in the state. The investment must create at least five new jobs for small and medium-sized businesses and 50 jobs for larger enterprises. The jobs also have to meet the median annual compensation requirement for the current tax year. For 2015 and after, that number is $45,100.
The exact credit amount depends on a number of factors, including your qualified investments and employee compensation, but the credit is split into five equal annual installments.
To calculate your credit, follow the instructions on this form.
Grow New Jersey Assistance Tax Credit
The Grow New Jersey Assistance Tax Credit incentivizes businesses to create or retain jobs in the state and make a qualified capital investment in a qualified business facility in a designated incentive area.
The amount of capital you have to invest and the number of employees you have to hire or retain depends on the investment area and industry you’re in. Here are the minimums New Jersey outlines.
Capital investment requirements:
- Businesses investing in the rehabilitation, improvement, fit-out, or retrofit of an existing industrial, warehousing, logistics, or research and development premises need to make a minimum investment of $20 per square foot of gross leasable area
- Businesses investing in the new construction of an industrial, warehousing, logistics, or research and development premises need to make a minimum investment of $60 per square foot of gross leasable area
- Businesses investing in the rehabilitation, improvement, fit-out, or retrofit of an existing premises that does not fit into category one need to make a minimum investment of $40 per square foot of gross leasable area
- Businesses investing in the new construction of a premises that doesn’t otherwise belong to one of the above categories need to make a minimum investment of $120 per square foot of gross leasable area
For projects located in one of the following areas, the minimum capital investment amount will be reduced by one-third: Garden State Growth Zone, Atlantic county, Burlington county, Camden county, Cape May county, Cumberland county, Gloucester county, Ocean county, or Salem county.
Employment requirements:
- Technology startups and manufacturing companies have to hire a minimum of 10 new full-time employees or retain at least 25 full-time jobs
- Businesses in target industries outside of tech startups and manufacturing companies have to hire a minimum of 25 new full-time employees or retain at least 35 full-time jobs
- All other businesses have to hire a minimum of 35 new full-time employees or retain at least 50 full-time jobs
For projects located in one of the following areas, the minimum number of new or retained jobs will be reduced by one-quarter: Garden State Growth Zone, Atlantic county, Burlington county, Camden county, Cape May county, Cumberland county, Gloucester county, Ocean county, or Salem county.
The amount of tax credit for meeting the employment requirements ranges from $500 to $5,000 for each job created or retained. See the full tax credit breakdown here, and complete your tax credit form here.
Related: How to hire employees easily—and legally—in New Jersey
Development incentives
Aspire Program
The Aspire Program—which was created to encourage strategic real estate development in New Jersey—offers a few different tax credits to qualifying development companies.
Companies that complete commercial projects in a government restricted municipality (GRM) can get tax credits of up to 50% of their project costs. Newly constructed residential projects using Low Income Housing Tax Credits (LIHTCs) can receive tax credits of up to 60% of their project costs.
To qualify, residential projects must have costs totalling at least $5 million, and commercial projects must be at least 100,000 square feet.
See details on the Aspire Program here.
Historic Property Reinvestment Program
The Historic Property Reinvestment Program gives businesses tax credits for rehabilitating or transforming historic properties in New Jersey. The tax credit amount is based on the cost of rehabilitation. Businesses can get:
- A credit equal to 50% of the cost of rehabilitation up to a maximum of $8 million, for rehabilitation projects located outside a qualified incentive tract or a government-restricted municipality
- A credit equal to 60% of the cost of rehabilitation up to a maximum of $12 million, for rehabilitation projects located within a qualified incentive tract or a government-restricted municipality
- A credit equal to 45% of the cost of rehabilitation up to a maximum of $50 million for rehabilitation projects that include a transformative property
Learn more about the program here.
Brownfields Redevelopment Incentive Program
Like many other states, New Jersey has a brownfields incentive program that encourages business owners to renovate and redevelop designated brownfield sites for commercial, retail, or mixed-use purposes.
Tax credit amounts are based on the remediation costs and project location.
Projects that involve erecting a solar panel array on a closed sanitary landfill can get:
- 100% of remediation costs covered up to $12 million, if the project is located in a GRM or Qualified Incentive Tract (QIT)
- 100% of remediation costs covered up to $8 million, if the project is located elsewhere in the state
All other brownfield projects can get:
- 80% of remediation costs covered up to $12 million, if the project is located in a GRM or QIT
- 60% of remediation costs covered up to $8 million, if the project is located elsewhere in the state
Learn more about the program and how to apply here.
Food Desert Relief Program
Under New Jersey’s Food Desert Relief Program—which aims to improve food security across the state—developers, grocery stores, and various food retailers can receive tax credits for meeting certain criteria.
Developers working on creating a new supermarket or grocery store in a food desert community can receive a tax credit of up to 40% of the total project cost for the first store, and up to 20% for the second store.
Owners and operators of supermarkets or grocery stores will be eligible to receive three years of tax credits up to 100% of their initial operating costs for the first store, and up to 50% of initial operating costs for the second store. To qualify, a supermarket or grocery store must be a retail outlet with at least 16,000 square feet, 80% of which is occupied by food and related products.
Learn more about the program here.
Industry-specific incentives
New Jersey Film & Digital Media Tax Credit Program
The New Jersey Film & Digital Media Tax Credit Program incentivizes production companies to set their film and digital media projects in New Jersey. Qualified production companies can receive a tax credit equal to 30-35% of qualified production costs. That includes crew salaries, purchases, and rentals.
To quality for the film credit, a project must:
- Incur at least 60% of total film production expenses in New Jersey
- Begin principal photography within 180 days of the New Jersey Economic Development Authority’s receipt of a completed tax credit application
To qualify for the digital media credit, a project must:
- Spend at least $2 million through authorized New Jersey vendors
- Allocate at least 50% of the qualified digital expenditures toward wages and salaries paid to full-time workers in New Jersey
There’s also a Digital Media Post-Production Tax Credit available to production companies that do post-production work in New Jersey (regardless of whether or not they filmed there). Those companies have to spend at least $500,000 of their total digital media content post-production budget on post-production services within the state.
Get more details on the credit program here.
Next New Jersey Program – AI
The forthcoming Next New Jersey Program will give tax credits to businesses in the artificial intelligence (AI) industry or the AI data center industry. The amount of tax credit is the lesser of:
- 0.1% of the eligible business’s total capital investment multiplied by the number of new full-time jobs;
- 25% of the eligible business’s total capital investment; or
- $250 million
The program isn’t up and running quite yet, but you can learn more about it—and sign up for updates—here.
Related: How to use AI in your small business
Manufacturing Equipment and Employment Investment Tax Credit
With the Manufacturing Equipment and Employment Investment Tax Credit, businesses can get a tax credit for acquiring manufacturing equipment or hiring new employees. Qualified businesses can get a credit equal to 4% of their investment base, up to $1 million.
To qualify, businesses should have 50 or fewer employees and a net income of less than $5 million. Download the application form here.
Effluent Equipment Tax Credit
The Effluent Equipment Tax Credit is available to businesses that purchase equipment used to treat liquid waste or sewage in an industrial process—exclusively in New Jersey. The amount of credit is equal to 50% of the cost of the treatment equipment or conveyance equipment.
To claim the credit, download this form.
Redevelopment Authority Project Tax Credit
The Redevelopment Authority Project Tax Credit is available to certain manufacturing-related businesses located in designated New Jersey project areas. If these businesses meet the requirements and hire new employees, they can get a tax credit of $1,500 each year for two years.
To qualify, businesses must be involved in manufacturing or other activities that aren’t retail sales or warehousing-oriented. They also have to hire new employees that were previously unemployed or on public assistance.
Claim the credit here.
Sheltered Workshop Tax Credit
The Sheltered Workshop Tax Credit is available to businesses that employ handicapped people at sheltered workshops, organizations or institutions that provide training and employment for people with disabilities.
The credit amount is equal to 20% of the employee’s salary and wages from the tax year, not to exceed $1,000. See the tax form here.
Donating/investing incentives
Neighborhood Revitalization State Tax Credit
This tax credit rewards New Jersey businesses for financially contributing to a nonprofit organization to implement an approved neighborhood preservation and revitalization plan. The credit is equal to 50% of the business’s contribution total, not to exceed $1 million.
To claim the credit, fill out the form here.
Angel Investor Tax Credit Program
New Jersey’s Angel Investor Credit rewards high-net worth individuals for investing in New Jersey technology startups. Angel investors can get a tax credit of 20% of their investment amount (or 25% if the company is a certified minority-owned or woman-owned business). They can apply the credit to their corporation business tax or gross income tax for investments in New Jersey.
Investors will only be eligible for the credit if they invest in New Jersey tech companies with fewer than 225 employees, 75% of whom are located in the state.
Get more information on the credit here.
Research and Development Tax Credit
New Jersey’s Research and Development (R&D) Tax Credit incentivizes New Jersey companies to invest in qualified R&D activities within the state. The credit is equal to 10% of the excess qualified research expenses over a base amount, plus 10% of the basic research payments.
New Jersey defines qualified research as scientific experimentation or engineering activities used to develop a new or improved product, process, technique, formula, invention, or computer software program.
Here’s the R&D tax form to fill out.
Pro tip: Learn more about the federal R&D tax credit to see how you can qualify.
Urban Enterprise Zone Investment Tax Credit
The Urban Enterprise Zone Investment Tax Credit is available to qualified businesses with 50 or fewer employees that have invested in designated Urban Enterprise Zones. Businesses have to invest at least $5,000 if they have fewer than 10 employees; for every employee over 10, the investment amount increases by $500.
See the tax form here.
New Jersey business tax exemptions
Sales and Use Tax Exemption Program
New Jersey businesses that have 1,000 or more employees and need to purchase items to construct or renovate a new business location may be eligible for a tax exemption. Qualified businesses can get a sales tax exemption on purchases of machinery, equipment, furniture, fixtures, and building materials for their new project location.
To qualify, companies need to meet one of the below criteria:
- Have at least 1,000 employees, and relocate at least 500 of them to a new or rehabilitated facility; or
- Be a life sciences or manufacturing company relocating 250 or more employees to a new or rehabilitated facility
Learn more about the program here.
Urban Enterprise Zone Manufacturers Energy Sales Tax Exemption
Urban Enterprise Zone (UEZ)-certified manufacturers that meet certain criteria can get an exemption from the sales and use tax for electricity and natural gas entities consumed at the UEZ location.
To qualify, manufacturers must have at least 250 full-time workers, 50% of whom must be involved in the manufacturing process.
Get more details here.
New Jersey city and county tax credits
Many New Jersey cities and counties have similar—but separate—business tax incentive programs from the state. For example, businesses in Salem County are eligible for an energy sales tax exemption for the retail sales of electricity and natural gas (and their transport) to manufacturing businesses in the county.
Search for your city’s website here to see which local programs are available.
New Jersey business financing resources
Tax incentives can support your bottom line, but if you need more capital, it’s a good idea to look into state financing programs. New Jersey has a multitude of business loans and grants for operations in every industry—and every part of the state. Check out Gusto’s guide to business grants and loans in the Garden State to get started.
