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New Jersey Enacts Corporate HQ Credit – Tax & Accounting Blog

New Jersey has enacted a tax credit for new corporate headquarters that meet job creation and capital investment requirements. The credit may apply if the business has created at least 30,000 new full-time jobs and made at least $3 billion in capital investment by the 20th year of an incentive agreement.

Application for the HQ Credit

Taxpayers must apply for the tax credit before July 1, 2019. Applications must be made with the New Jersey Economic Development Authority.

Qualifying for the HQ Credit

An incentive agreement is broken into eligibility periods that cannot exceed 10 years for a given project phase. For each new full-time job, the credit is $10,000 per year for up to 10 years. The credit is calculated annually for each year of eligibility. A business can carryover credits for 50 tax periods. The credit can be transferred with a tax credit transfer certificate. There is no cumulative cap on the value of credits that can be approved by the authority.

Requirements of the HQ Credit Incentive Agreement

The incentive agreement must require the business to annually report and certify that it has met the employment and capital investment requirements. In addition, it must include a provision for audits of payroll records.

If the number of few full-time employees drops below 80% of the number in the agreement, the credit is forfeited for that tax period. However, if the number is restored to this 80% level, the credit may resume. At the 20th year of the incentive agreement, reduced tax credits and claw backs apply if the capital investment and job creation levels are not met.

Ch. 282 (A.B. 5340), Laws 2018, effective January 11, 2018

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Author: CCHTaxGroup

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