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ANGEL INVESTOR TAX CREDIT ERA-UPDATE


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 or in a qualified venture fund for the purposes of stimulating investment.

The NJEDA Board has approved the updated rules for the Angel Investor Tax Credit Program and the updated program is now active. Please see the updated product card at www.njeda.com/angeltaxcredit/

ELIGIBILITY

To receive tax credits through the Angel Investor Tax Credit Program, an investor must invest in an emerging technology business that:

  • Employs at least 1 and fewer than 225 full-time employees, at least 75 percent of whom must work in New Jersey at the time of the investment and the application submission.
  • Conducts business, employs, owns capital or property, or maintains an office in New Jersey.
  • Incurs qualified research expenses, conducts pilot scale manufacturing, or commercializes one or more eligible technologies in New Jersey.
  • Has an eligible technology as its primary business.

Investors can also receive tax credits for investments in a qualified venture fund that:

  • Is a partnership, corporation, trust, or limited liability company administered by a professional manager that invests cash in a business during the early or expansion stages in exchange for an equity stake in the business.
  • Invests a minimum of 50 percent of its funds in New Jersey based businesses

Investments must:

  • Be either a non-refundable transfers of cash to a business in exchange for stock or other eligible investment or asset, or an irrevocable contractual commitment to a venture fund.

An Angel Inventor Tax Credit recipient is not required to be a resident of New Jersey or the United States. The NJ Division of Taxation is the final approver and issuer of tax credits through this program.

AWARD SIZE

Investors can receive a tax credit in an amount equal to 20 percent of the qualified investment. For investments in businesses, an additional 5 percent bonus is available if the company is located in an Opportunity Zone or New Market Census Tract, or is certified as women or minority owned by the State prior to the date of investment for the qualified investment. For commitments in qualified venture funds, an additional 5 percent bonus is available if the fund invests a minimum of 50 percent in diverse entrepreneurs. The maximum allowed tax credit is 25 percent of the qualified investment and cannot exceed $500,000.

The total approved amount of Angel Investor Tax Credits under the program cannot exceed $35 million in any calendar year. If exceeded, Angel Investor Tax Credits can be approved for the next succeeding calendar year.

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