July 13, 2021
New Jersey governor signs law revising state credit and incentives programs
On July 2, 2021, Governor Phil Murphy signed A.5939/S.3993 (new law), which revises provisions of the New Jersey Economic Recovery Act of 2020 and other previously enacted economic development programs.
The new law addresses key aspects of the core incentives programs related to job creation and capital investment, including the new Emerge NJ Program, the Urban Enterprise Zone (UEZ) Program, Grow NJ, Business Employment Incentive Program (BEIP) and the Business Retention and Relocation Assistance Grant (BRRAG) Program. The new law also revises provisions in the New Jersey Economic Recovery Act of 2020 concerning "food deserts," the brownfield program, offshore wind tax credits and more.
The Emerge NJ Program gives taxpayers that meet minimum thresholds and other requirements an annual nonrefundable income tax credit ranging from $500 to $8,000 for up to seven years per new job created. In certain circumstances, projects involving large-scale job retention can also qualify. The tax credits can be sold when taxpayers have insufficient tax liability to offset.
The new law sets forth a new requirement obligating eligible program applicants to demonstrate that the new and retained full-time jobs at the qualified business facility are subject to 80% or more of New Jersey withholding tax.
The Urban Enterprise Zone (UEZ)
The new law primarily addresses administration, funding and management of the UEZ program and includes the following changes:
GROW NJ, BEIP, BRRAG
The new law changes the definition of "full-time employee" for the purpose of several economic development programs, including the GROW NJ Assistance Program, BEIP and the BRRAG. Under the old rules, full-time employees had to be present at a qualified business facility for 80% of their time. The new law reduces this requirement to 60%, and clarifies that the amendment of this specific provision does not alter or terminate any waiver of the work-onsite requirement implemented by the New Jersey Economic Development Authority (NJEDA) due to the COVID-19 public health emergency and state of emergency.
The new law makes the following clarifications and changes to the programs created by the New Jersey Economic Recovery Act of 2020 and other previously enacted economic development programs.
Businesses currently receiving these incentives, and those seeking to claim these incentives, should review these changes and determine if the changes impact their eligibility.