By Amanda Dominguez
The only bad thing about tax credits is the possibility of missing out on one.
To make sure that doesn’t happen to your business, here is some background on the Grow New Jersey tax incentive and how it could affect your company.
Per-employee credits add up
The Grow New Jersey Assistance Program is offered through the state’s Economic Development Authority (EDA) to encourage businesses in technology, manufacturing, warehousing, research and development and other categories to settle in Qualified Incentive Areas — primarily in the state’s distressed hubs in its major cities. It offers state tax credits of between $500 and $5,000 per qualified employee, as well as bonus credits. Credits can be earned for hiring new employees and retaining existing workers, and if you’re a startup tech firm, you can qualify for the program with as few as 10 existing employees.
In addition, while these tax credits are usually paid over several years, a qualifying company can sell a credit to a third party at a discount to get all of the value up front.
The down side of the program is the amount of paperwork required. The state mandates that there must be an economic benefit for the company’s move to the Qualified Incentive Area, and this must be proven via a lease analysis and other means. As a result, you’ll need to work with an experienced accountant who understands the intricacies of applying for the credit, but the time and money spent could prove to be well worth it. For example, our firm found $5.4 million in credits for one client that will create 45 new jobs over the next 10 years.
For program details, eligibility requirements and other information, contact me, or visit the New Jersey Economic Development Authority.
Amanda Dominguez, MST, is a tax supervisor at Wiss & Company LLP.