SENATE BUDGET AND APPROPRIATIONS COMMITTEE

STATEMENT TO

[First Reprint]

SENATE, No. 3189

STATE OF NEW JERSEY

DATED:  FEBRUARY 3, 2025

      The Senate Budget and Appropriations Committee reports favorably Senate Bill No. 3189 (1R).

      This bill increases the amount of the tax credit provided under the “New Jersey Angel Investor Tax Credit Act” for a qualified investment made in a New Jersey emerging technology business venture.  Under current law, a taxpayer is allowed a credit against the gross income tax and corporation business tax in an amount equal to 20 percent of a qualified investment made by the taxpayer in a New Jersey emerging technology business or a qualified venture fund.  A taxpayer may also qualify for an additional five percent credit when the qualified investment is made in: (1) an emerging technology business that is located in an opportunity zone or a low-income community; or (2) an emerging technology business that is a minority business or women’s business, and, in the case of a qualified venture fund, if the qualified venture fund commits by contract to invest 50 percent of its funds in diverse entrepreneurs.

      The bill increases the amount of the tax credit that may be provided to a taxpayer from 20 percent to 35 percent of the taxpayer’s qualified investment in a New Jersey emerging technology business or qualified venture fund.  The bill also increases the total amount of the tax credit provided to taxpayers that qualify for the additional five percent credit from 25 percent to 40 percent of a taxpayer’s qualified investment.  The bill also revises the definitions of “New Jersey based business” and “New Jersey emerging technology business” to lower, from 224 to 149, the maximum number of employees that a business may employ in order for a taxpayer to qualify for the tax credit.

FISCAL IMPACT:

      The Office of Legislative Services (OLS) estimates that the State may incur a maximum annual revenue loss of $15.2 million to $15.7 million as a result of this bill.  Under current law, the Angel Investor Tax Credit Program has an annual cap of $35 million.  The bill increases the value of tax credits that may be awarded for qualified investments through the program; it does not increase the limit on total annual awards.

      Information published in the New Jersey Economic Development Authority’s annual reports shows that the authority awarded $113.7 million in Angel Investor Tax Credits during the 10-year period from calendar year 2014 through calendar year 2023, incentivizing $996.4 million in qualified investments during that time.

      To the extent that additional investments in emerging technology business ventures resulting from the bill spur greater economic activity, the State and local governments could benefit from increased tax revenues.  However, the magnitude of these revenues cannot be determined.