New Jersey is Open for Business
The New Jersey Economic Development Authority (“NJEDA”) has announced that it will begin to accept applications for the Emerge Program. The Emerge Program is New Jersey's new major job creation and retention incentive program that was ushered into law by legislative leaders and Governor Murphy as part of the New Jersey Economic Recovery Act of 2020.
All businesses that apply for the New Jersey Corporation Business Tax Credits (hereafter, “Emerge Tax Credits”) must meet minimum capital investment and minimum job creation or retention requirements. Emerge Tax Credits can be sold if the recipient is unable to use the credits. The credits cannot be sold for less than 85% of the face value before considering further adjustments to account for net present value.
Most approved projects will receive the Emerge Tax Credits over a seven-year eligibility period, which begins after the applicant certifies with NJEDA that it has completed its investment and employment requirements. Base tax credits will range from $500 to $4,000 per job, per year, depending on location, industry, job type, salary, and other particular bonus criteria. Certain types of bonuses can increase annual per-job credits to a maximum of $8,000 per job. For retained jobs, the tax credit amount is divided in half.
In general, to qualify for Emerge Tax Credits there should be at least 35 new jobs (with lower requirements for small businesses and certain targeted industries) and capital investment of:
- New construction office space - $120 per square foot of gross leasable area;
- Rehabilitation office space - $40 per square foot of gross leasable area;
- New construction of industrial, warehouse, logistics, or R&D facility - $60 per square foot of gross leasable area; and
- Rehabilitation of industrial, warehouse, logistics, or R&D facility - $20 per square foot of gross leasable area.
These requirements may be reduced depending on project location, industry type, and business size. For example, a business with less than 100 employees that is engaged in a targeted industry does not have to satisfy the above investment criteria. In order for a project to be approved, it must yield a “net benefit” to New Jersey in terms of the projected economic impact from the project exceeding the requested Emerge Tax Credit amount. The required percentage by which the net benefits exceed the requested Emerge Tax Credits depends on project location. Approved projects must commit to remain at the project site for 1.5 times the length of the requested Emerge Tax Credits.
In addition to the above requirements, there are a myriad of different nuances and specific details which affect award calculations and potential qualification. However, the opening of the Emerge Program is a welcome sight in the Garden State.
And, coming soon, the NJEDA should be releasing details on the new incentive programs for real estate development, community anchor projects, food dessert grocery and supermarket projects, and other main-street incentives as part of the above-referenced Economic Recovery Act of 2020.
If you have any questions regarding New Jersey’s new Emerge Program please contact your Citrin Cooperman advisor or Jaime Reichardt, state and local tax principal, directly at email@example.com or 215.545.4800 x4520.
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