NJ Angel Investor Credit
What is the NJ Angel Investor Credit?
The NJ Angel Investor Credit was initially signed into law in 2013 and was amended by the New Jersey Economic Recovery Act in 2020. This credit is designed to encourage investors to invest in emerging New Jersey technology businesses. The Economic Recovery Act allocated an additional $10 million to the NJ Angel Investor credit growing the yearly credit from $25 million per year to $35 million starting in 2021.
What Companies Qualify for Investment?
Companies that qualify for Angel Investors are New Jersey emerging technology companies. The company must maintain an office in New Jersey, have fewer than 225 employees, and at least 75% of those employees’ positions must be located in New Jersey. On top of these requirements in order to qualify as an emerging technology company they must conduct technology commercialization in New Jersey in the fields of advanced computing, advanced materials, biotechnology, carbon footprint reduction technology, electronic device technology, information technology, life sciences, medical device technology, mobile communications technology, renewable energy technology, conduct pilot scale manufacturing in New Jersey, or have qualified research expenses paid or incurred for research conducted in New Jersey.
How much is the Credit?
Starting in 2021, the state will approve up to $35 million for the Angel Investor Credit. The maximum credit per taxpayer is $500,000 per investment. The credit is refundable for an individual taxpayer. This means that if the credit exceeds the taxpayer’s tax liability, they will receive a refund for the excess. A corporate taxpayer can choose to either receive a refund of the excess or they can carry the credit forward for up to 15 years.
How do I Claim the Credit?
Applicants must first apply for the credit by filling out and submitting a form online to the New Jersey Economic Development Authority at: https://application.njeda.com/angeltaxcredit.aspx
The application must be submitted and the application fee must be paid within 6 months after the investment. The fees for the application and credit are as follows:
- 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
- The greater of:
- 5% of the amount of the Angel Investor tax credit, or
- The application fee is credited toward the approval fee.
- The greater of:
- 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.
Investors can check the status of their application online at: https://application.njeda.com/angeltaxcredit_login.aspx
When the credit is approved taxpayers must fill out Form 321 with their tax return. Foreign and out of state investors must file a New Jersey tax return in order to receive the credit for their investments.
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