NJ Enacts $500 Million Manufacturing Credit Program

The Next New Jersey Manufacturing Program, signed into law on Aug. 13, sets aside $500 million in transferable tax credits with respect to qualifying costs for eligible projects through 2029. The New Jersey Economic Development Authority (NJEDA) will administer the program.

The NJEDA will begin accepting applications soon, and applications may be submitted through March 1, 2029. The NJEDA has launched a website and will post additional details as they become available.

Eligible facilities and projects

A qualified business facility must be located in New Jersey and be used primarily for:

• Production or assembly of goods
• Production of clean energy components (for example, offshore wind, solar, geothermal, green hydrogen, nuclear, fuel cells, and battery storage)
• On-site product research and development, including ancillary packaging and distribution

Projects also must satisfy New Jersey wage and other standards including median pay at or above 120% of the county manufacturing median, prevailing wage requirements for construction and building services, baseline sustainability standards, and a workforce collaboration with a New Jersey educational or workforce entity.

A minimum capital investment of $10 million at a New Jersey facility and creation of 20 new full-time New Jersey jobs also is required. A full-time job generally requires a 35-hour work week.

Eligible costs

Eligible costs from application through completion include costs for:

• Site preparation
• Construction, repair, renovation, or improvement of buildings and structures
• Acquisition and installation of machinery, apparatus, equipment, and parts
• Site utilities and related infrastructure
• Certain transportation work
• Solar, energy storage, and other components installed to achieve LEED Silver or Gold (to the extent the components are not funded by other New Jersey grants)
• Capital leases of furnishings and equipment
• Soft costs up to 20% (for example, design, engineering, legal, and construction management)

Credit value, use, and transfer

The amount of the credit that can be awarded per project is the lesser of the following:

1. 0.1% of total capital investment multiplied by the number of new full-time jobs
2. 25% of total capital investment
3. $150,000,000

Additionally, the NJEDA can award limited bonuses of up to 5% of the award.

For example, assume a business makes a qualifying investment of $10 million and hires 20 employees. The investment is less than $150 million so the lesser award determined under the other two tests would apply: 25% of the total capital investment of $10 million, which is $2.5 million. However, $10 million times 0.1% is $10,000. Multiplied by 20 jobs, the total credit is $200,000, the lowest amount, and therefore, the amount of the credit.

The program also permits transfer of the credit. An eligible business may obtain a tax credit transfer certificate and sell credits in increments of at least $25,000 at no less than 85% of face value. A purchaser can apply the credit in the issuance year or any of the next three tax periods, and unused amounts can be carried forward up to 10 additional periods. The NJEDA will publish the material terms of each transfer on its website.

Crowe observation

Because the credit is transferable at no less than 85% of its face value, the credit can be turned into near-term cash.

Credits can be applied against New Jersey corporation business tax, certain public utility gross receipts and franchise taxes, and insurance premium taxes (life and nonlife). New Jersey personal income taxes and the New Jersey business alternative income tax do not appear to be eligible to be reduced by this credit.

Application, certification, and ongoing compliance

After NJEDA board approval, and before executing the project agreement, the applicant must demonstrate site plan approval, committed financing, and site control for the facility. Once capital investment and hiring requirements are satisfied, the applicant must certify compliance, after which it may claim the credit annually during the eligibility period. Failure to maintain commitments can result in proportional reduction, forfeiture, or recapture of the credit.

Other New Jersey programs (such as the Aspire and Emerge programs) require applicants to report facts supporting that the New Jersey capital investment would not happen without program support (a “but-for” test). By contrast, the Next New Jersey Manufacturing Program relies on objective thresholds and compliance requirements.

Looking ahead

Manufacturers planning a New Jersey capital investment should assess whether their project size, hiring plan, wage structure, and compliance capacity satisfy the program’s requirements. With no but-for test and clear, objective thresholds, the program might offer significant tax benefits to qualifying manufacturers. Combined with new federal tax benefits for U.S. manufacturing under the One Big Beautiful Bill Act, such as immediate expensing for domestic research and experimental activities, renewal of bonus depreciation and the qualified production property deduction for U.S. manufacturing facilities, and easing of the Section 163(j) interest limitation, the program provides New Jersey manufacturers with more tax-efficient options for expanding their U.S. operations.