New Jersey Expands Angel Investor Tax Credit for Investments in Emerging Tech Businesses
New Program Includes Bonus for Investing in Low-Income Communities or Minority-, Women-Led Businesses
TRENTON, N.J. (July 10, 2019) – Furthering his commitment to grow New Jersey’s innovation economy by increasing access to funding for early-stage businesses, Governor Phil Murphy signed Assembly Bill 5604 on June 30, expanding New Jersey’s Angel Investor Tax Credit Program. The program, which provides a tax credit for a percentage of an angel investor’s investment in a qualifying emerging New Jersey technology or life science business, helps attract early-stage and growth capital for innovative New Jersey companies.
Under the expanded program, the available tax credit increases from 10 percent to 20 percent of a qualified investment, with an additional five percent bonus available for investments in a business located in a qualified opportunity zone, low-income community, or a business that is certified as minority- or women-owned by the State. The Angel Investor Tax Credit Program is administered by the New Jersey Economic Development Authority (NJEDA), with the assistance of the Department of the Treasury’s Division of Taxation. More information can be found at www.njeda.gov/angeltaxcredit.
“The enhanced Angel Investor Tax Credit will help to attract much needed investors and investments and help companies form, grow, and remain in the Garden State,” said BioNJ President and CEO Debbie Hart. “New Jersey continues to lead the way in medical innovation – discovering and delivering new therapies and cures that are changing the lives of patients around the world. Programs and incentives such as the Angel Investor Tax Credit are core to ensuring that the State remains a global biopharmaceutical hub.”
The Angel Investor Tax Credit Program offers a refundable tax credit against New Jersey corporation business or gross income tax for qualified investments in an emerging technology business with a physical presence in New Jersey that conducts research, manufacturing, or technology commercialization in the state. Businesses must have fewer than 225 employees, and at least three quarters of those employees must work in New Jersey.
Since the program’s inception in 2013 through March 31, 2019, the NJEDA has approved 1,186 applications for investments in 85 New Jersey-based businesses totaling more than $534 million. In 2018 alone, the NJEDA received nearly 250 applications and approved credits for $197 million worth of investments in 46 different companies.
The expanded program parameters, which will be in effect for investments made after January 1, 2020, brings New Jersey’s program in line with similar resources offered by competing states, and will help attract even more angel investors to New Jersey by doubling the available tax credit from 10 percent to 20 percent of qualified investments. It also advances Governor Murphy’s commitments to supporting historically disadvantaged communities and building the most diverse innovation ecosystem in the nation by including a five percent bonus (allowing for a total tax credit of 25 percent) for investments in businesses located in qualified opportunity zones or low-income communities and State-certified minority- and women-owned startups.
“One of the biggest challenges facing angel investors like me is dealing with the significant risk that comes with backing an early-stage company which may not be able to turn a profit for years, if at all. New Jersey’s Angel Investor Tax Credit helps offset that risk, and that makes investments in New Jersey companies much more attractive to me and to other investors,” said Mario Casabona, Founder and CEO of TechLaunch, LLC and Casabona Ventures, LLC. “New Jersey’s legacy is one of innovation and inspiration, boasting countless successes in our past and countless more in our future. The expanded Angel Investor Tax Credit Program will help steer our talented technology ecosystem toward profitable and enviable achievements.”
In addition to the Angel Investor Program, the NJEDA provides a variety of resources for businesses at every stage of the startup process. From NJ Founders and Funders events that connect Jersey-based entrepreneurs with investors, to the NJ Ignite rent-support program that provides free rent to startups leasing space in participating coworking facilities, and the Technology Business Tax Certificate Transfer Program, (commonly known as the Net Operating Loss (NOL) Program) which allows companies to sell unused net operating losses and Research and Development tax credits for nondilutive working capital, New Jersey has many programs to support entrepreneurs throughout the process of launching and growing their businesses.
“Innovation is what allows today’s emerging New Jersey-based companies to become tomorrow’s major New Jersey-based companies. It drives sustainable economic growth at a time when re-establishing New Jersey’s position as a national innovation leader is critical to building a stronger, fairer economy,” said NJEDA Chief Executive Officer Tim Sullivan. “This is why the Governor’s comprehensive economic plan identified the expansion of the Angel Investor Tax Credit as an impactful way to support early-stage companies, and ensure New Jersey is home to innovative companies for years to come.”
To read Governor Murphy's full economic plan, please visit: https://nj.gov/economicplan
About the New Jersey Economic Development Authority
The New Jersey Economic Development Authority (NJEDA) serves as the State’s principal agency for driving economic growth. The NJEDA is committed to making New Jersey a national model for inclusive and sustainable economic development by focusing on key strategies to help build strong and dynamic communities, create good jobs for New Jersey residents, and provide pathways to a stronger and fairer economy. Through partnerships with a diverse range of stakeholders, the NJEDA creates and implements initiatives to enhance the economic vitality and quality of life in the State and strengthen New Jersey’s long-term economic competitiveness.
To learn more about EDA resources for businesses call EDA Customer Care at 609-858-6767 or visit https://www.njeda.gov and follow @NewJerseyEDA on Facebook, Twitter, and LinkedIn.