ANGEL INVESTOR TAX CREDIT PROGRAM
The New Jersey Angel Investor Tax Credit Program establishes tax credits against corporation business or gross income taxes based on a qualified investment in a New Jersey emerging technology businesses for the purposes of stimulating investment.
The Economic Recovery Act signed by Governor Murphy in January, 2021 has increased the annual program cap to $35 million from $25 million in tax credits.
All investors that invest in a qualifying NJ emerging technology business may benefit from a tax credit through the Angel Investor Tax Credit Program.
APPLICATION
Applicants have six months from date of investment to submit an application to the New Jersey Economic Development Authority. Please note that this is a dual application consisting of an investor section and a section for the technology company representative to complete. An application is not considered submitted until both the investor and technology company representative have completed and submitted their respective sections, including payment of the non-refundable application fee by the investor.
The Angel Investor Tax Credit Program now offers the ability to check your application status by logging into your online application link. These statuses will be updated every few weeks, so please allow some time after application submission to be logged into the system. Should the EDA need any information from you during the review period, we will be reaching out to the emails that were provided in the application.
Please note all applicants (including foreign and out of state) must file NJ taxes for the year in which their application will be considered. You may be required to file taxes before you have been given confirmation of an approval. The “Tax Year” considered, can be found by checking the OLA status mentioned above. Additional instructions will be included when you receive your tax certificate and include instructions for Individual filers and for Corporate filers
As of 10/1/2021, any applicants that pay their fee and submit the investment portion of the application on time, but subsequently are unable to coordinate the submission of the Technology company portion with their respective NJ emerging technology business prior to the 6 month deadline, will be recommended for declination. The entire application must be submitted within the 6 month window post investment. Investors are responsible for not only finishing their portion, but also following up with the Technology business point person to ensure the company portion is completed and submitted prior to the deadline.
PROGRAM DETAILS
Through calendar year 2020, the Authority may approve up to $25 million of Angel Investor Tax Credit annually. Starting in calendar year 2021, up to $35 million of Angel Investor Tax Credit may be approved per calendar year.
If the cumulative credits requested by taxpayers exceed the amount available each year, then, the credits will be applied starting on the first day of the succeeding calendar year, in which Angel Investor Tax Credits do not exceed the amount of credits available. These applications will be reviewed in the order in which they were received and fully complete.
ELIGIBILITY
- Employs fewer than 225 full-time employees, at least 75% of whom work in New Jersey
- The company must have at least one employee that meets the definition of “full‐time employee” in order to be eligible for the program.
- Does business, employs or owns capital or property, or maintains an office in New Jersey
- Conducts at least one of the following activities in New Jersey:
- Incurs qualified research expenses in the State
- Conducts pilot scale manufacturing in the State
- Commercializes one or more of the following eligible technologies in the State: Advanced Computing, Advanced Materials, Biotechnology, Electronic Devices, Information Technology, Life Sciences, Medical Devices, Mobile Communications, Renewable Energy Technology, and Carbon Footprint Reduction Technology
- Has as its primary business an eligible technology (as listed above)
- Qualified investments include non-refundable transfers of cash made directly to the New Jersey emerging technology business in connection with at least one of the items listed below. To be considered non-refundable, these items must be held or not expire for at least 2 calendar years from the date of the transfer of cash, with an exception being made for initial public offerings (IPOs), mergers and acquisitions, damage awards for the business’s default of an agreement, or other return of initial cash outlay beyond the investor’s control.
- stock, interests in partnerships or joint ventures, licenses (exclusive or non-exclusive), rights to use technology, marketing rights, warrants, options, or any similar items, including but not limited to options or rights to acquire any of the listed
- a purchase, production, or research agreement
- Credits may be treated as an overpayment and refunded (but no interest on the overpayment will be paid.), For corporate taxpayers, the tax credits may be carried over up to 15 tax years following the tax year for which the credit was allowed. Individuals cannot carryforward the tax credits.
- Credits may not be carried forward in a tax year in which the taxpayer was a target for corporate acquisition or in which the taxpayer was party to a merger or consolidation unless the taxpayer can demonstrate to the New Jersey Division of Taxation the identity of the acquiring corporation.
- Credits may be claimed on the taxpayer’s New Jersey tax return in the tax year applicable to the effective date of approval.
- Applications should be submitted by the angel investor entity, if applicable, or the individual angel investor. The New Jersey emerging technology business also will need to fill out a section of the application and provide certain information with the submission, though the angel investor is responsible for all application information.
FEES
- Application fee (non-refundable):
- $500 for investment amounts of $50,000 or less
- $2,500 for investment amounts over $50,000
- Approval fee for qualified investments over $500,000
- 5% of the amount of the tax credit or $2,500, whichever is greater. The application fee is credited toward the approval fee.
- A non-refundable fee of $150.00 shall be paid to the Authority for each request for reissuance per tax certificate previously issued pursuant to N.J.A.C. 19:31-19.6.
M/WBE CERTIFICATION
Early-stage businesses interested in becoming a certified M/WBE must complete an application with the New Jersey Department of the Treasury – Division of Revenue. There is a $100 application fee (non-refundable), and M/WBE certifications are valid for 3 years.
For more information on M/WBE certification, please call the Division’s Business Registration and Certification Office at (609) 292-2146.
OPPORTUNITY ZONES / NEW MARKETS TAX CREDIT CENSUS TRACTS
A bonus of 5% of the qualified investment amount is available, for qualified investments made after 1/1/2020, in New Jersey emerging technology businesses that are located in a New Jersey Opportunity Zone or New Markets Tax Credit Census Tract.
NEW JERSEY DIVISION OF TAXATION
A Tax Clearance Certificate is required for most entities in order to be approved for NJEDA assistance. These instructions are available to assist with the process of registering a business and obtaining a tax clearance from NJ Division of Taxation. SECURING YOUR TAX CLEARANCE CERTIFICATE
You can email businessassistancetc.taxation@treas.nj.gov any time for pins, to confirm the exact business name and/or for general assistance with this process.
Also, you can email taxation.angelinvestor@treas.nj.gov with any questions around taxation, filing returns, or claiming the credit.
PROGRAM GUIDE
Please check out the additional resources below for more information
QUESTIONS
To answer any questions you may have, please first consult with the program videos and links provided above, including the “Frequently Asked Questions”. If this does not answer your questions, please email your questions and contact information to AngelTaxCredit@njeda.gov.