New Jersey offers an ideal location for business growth and development, the lowest operating costs in the region, and an array of financial, technical and training incentives designed to make New Jersey businesses among the most competitive in the world.
New Jersey has one of the lowest corporate income tax structures in the Northeast. There is no net worth tax, no business personal tax, no commercial rent or occupancy tax and no retail gross receipts tax. Personal income taxes are among the region's lowest.
Legislation recently signed modifies New Jersey's tax code by:
- Providing for a reduction in the State's Personal Gross Income Tax Rates with the Governor's commitment to future tax cuts.
- Increasing the minimum taxable income under the Personal Gross Income Tax
- Eliminating the Corporation Income Tax Surcharge
- Providing aggressive job and equipment tax credits
New Jersey law authorizes municipalities, under the State Constitution, to provide property tax abatements for commercial and industrial properties in areas in need of redevelopment.
New Jobs Investment Tax Credits
Companies that make certain investments-in new or expanded business facilities that are directly related to the creation of new jobs may be eligible for credits against their New Jersey Corporation Business Tax Liability. Other significant job tax credits are available for firms expanding, retaining or relocating new jobs in New Jersey.
Business Relocation Assistance Grants can be made available to reimburse businesses for relocation costs associated with the creation of a minimum of 25 new full-time jobs in New Jersey. The grant can be for up to 50% of the total allowable relocation costs or $200 per job created, whichever is less, and may not exceed 80% of the projected new income tax revenues from the jobs created.
Business Employment Incentive Grants can be made available to businesses that create at least 25 new full-time jobs in an urban-aid community or at least 75 new jobs elsewhere in New Jersey. The New Jersey Economic Development Authority can enter into agreements with qualifying businesses, for up to I 0 years, to make direct grants equal to 10% to 80% of the state income taxes withheld from the newly hired employees.
Certain investments made by companies for manufacturing equipment with a recovery life of four years or more are eligible for a credit against the New Jersey Corporation Business Tax Liability.
Recognition of Subchapter S Status for Corporations
New Jersey's corporations are provided a reduced corporation tax rate. The law defines the amount of minimum tax imposed on domestic and foreign corporations, determination of net income and the legal requirements to become an "S" corporation.
Businesses may be eligible for a credit against New Jersey's Corporation Business Tax liabgity for certain increased research expenditures in the state. The base period amounts and qualified expenditures are determined by the guidelines for the federal research credit.
New Jersey Limited Liability Company Act
Effective January 26, 1994, a domestic or foreign LLC is taxed in accordance with the corresponding federal classification and provides for LLC's to follow federal treatment of certain taxpayers.
Urban Enterprise Zones
In promoting growth and development, New Jersey has created an Urban Enterprise Zones (UEZ) in Trenton. Companies that locate within the zone and create jobs are eligible for a number of benefits and zone incentives that include:
A one-time corporation tax credit of $1,500 for the full-time hiring of residents of a city where a zone is located who have been unemployed or dependent upon public assistance for at least 90 days, or
A one-time corporation tax credit of $500 for hiring certain full-time employees who are residents of any UEZ municipality
Subsidized unemployment insurance costs, for certain new employees
Sales tax exemptions for materials and for tangible personal property
Foreign Trade Zone
Mercer County Airport in Mercer County houses a Foreign Trade Zone (FTZ). Within this zone, which are outside U.S. Customs territory, businesses may manufacture, assemble, package, test, grade, clean, mix, process and exhibit merchandise while realizing a substantial duty and cash flow savings. No duty is required to be paid until the goods are moved in the distribution system for sale in the United States. If re-exported, no duty will be assessed on the merchandise.
New Jersey's major utility companies provide a number of incentives, including flex rates, energy credits and rate discounts or waivers, for businesses that build or expand facilities and create jobs in New Jersey. Certain programs encourage the utilization of vacant industrial and commercial real estate. Electric credits are provided to firms which lease or purchase, and occupy, a minimum amount of vacant space as designated by the utility. Other programs apply "off-peak employment" credits, to help those companies starting or resuming a second or third shift during off-peak hours.