• New Jersey Enacts 10% Angel Investor Tax Credit
  • March 7, 2013
  • Law Firm: Herrick Feinstein LLP - New York Office
  • Angel investors -- persons who invest in high-risk start-up companies -- are entitled to a tax credit of up to 10% for qualified investments in New Jersey emerging technology companies with fewer than 225 employees, where at least 75% of those positions are located in New Jersey.  A "qualified investment" means the non-refundable transfer of cash for investment or collaboration purposes to a New Jersey emerging technology company by a taxpayer that is not a related party of such company.
     
    The tax credit program applies to several industries including, but not limited to, hardware and software development, biotechnology, information technology, film and television production, life sciences, medical device technology, mobile telecommunications and renewable energy.
     
    For individual investors, the credit is first applied to the investor's New Jersey gross income tax liability. Any excess amount is refunded.  For corporate investors, if the tax credit amount exceeds the corporate investor's business tax liability, then such investor may choose between having the amount of the excess refunded or carried forward to be applied against tax liabilities in the next 15 years.  The maximum credit allowed to an investor in any year is $500,000.