Press Room: Tax Release
New Jersey Economic Opportunity Act of 2013
Governor Chris Christie signed New Jersey Economic Opportunity Act of 2013 (NJEOA) into law on September 18, 2013. This law completely overhauls the credit/incentive programs available to taxpayers in the state. Specifically, NJEOA is intended to serve as a way of attracting new jobs and increasing overall economic development in the state. The NJEOA phases out three economic development incentive programs, while at the same time, expanding two other programs.
Programs Phased Out
NJEOA phases out the following programs:
- The Business Employment Incentive Program, which paid cash grants based on the number of new jobs created in New Jersey
- The Business Retention Relocation Assistance Grant Program, which provided tax credits to businesses relocating to New Jersey and businesses retaining jobs, maintaining jobs and making capital investments in New Jersey
- The Urban Transit Hub Tax Credit (UTH), which granted tax credits to businesses making capital investments in designated areas
Note, grants or credits under all three programs may still be awarded through December 31, 2013. However, in order for the credits to be awarded, the applications must have been submitted to New Jersey by September 18, 2013. The phased out programs have been consolidated into the two expanded programs described below.
The Economic Redevelopment and Growth Program (ERG) and the Grow New Jersey Assistance Program (GROWNJ) have been expanded. ERG is an incentive program meant to increase real estate development in the state. ERG can offer a grant if capital is limited or unavailable for a taxpayer to undertake a new capital project or if financing rates are unfavorable. This grant can be up to 75% of the annual state and local taxes (85% if it is in a Garden State Growth Zones (GSGZ)). The amount is derived from the taxable revenue that the business is projected to generate over a 20 year period.
GROWNJ is another incentive program that is intended to stimulate capital projects in the state. Projects in GSGZ areas can qualify for a credit of up to 40% of the capital investment (lower in other areas) made by a business. The threshold to qualify for the credit varies depending on the area of the state in which the investment is made, but it is generally lower in areas where the state is focused on development. The expanded credit includes an incentive of $500 to $5,000 per year, plus possible bonuses for each new job created or maintained up to 10 years.
What Has Changed?
NJEOA makes substantial changes related to qualification for the expanded tax credits/incentives. Some of the changes include the following:
- Establishing new GSGZs in the cities of Camden, Paterson, Passaic, and Trenton
- Expanding the areas that qualify for ERG and GROWNJ
- Lowering the eligibility thresholds (investment thresholds reduced by 33% and employment thresholds reduced by 25% in some areas)
Also, projects that previously qualified under the UTH for 100% of project costs can now only receive up to 35% of the project costs under ERG.
Applications for both the ERG and GROWNJ can be submitted from now until June 30, 2019 when the new provisions conclude.
Our professionals can assist companies in many ways regarding the changes in the available New Jersey tax credits including, but not limited to:
- Preparing the relevant credit applications
- Quantifying the approximate value that a company would receive if you are considering expanding or building new facility within these expanded GSGZs