SENATE, No. 3377

STATE OF NEW JERSEY

221st LEGISLATURE

 

INTRODUCED JUNE 3, 2024

 


 

Sponsored by:

Senator  JOSEPH F. VITALE

District 19 (Middlesex)

 

 

 

 

SYNOPSIS

     Provides corporation business tax credit for certain investment in manufacturing equipment and manufacturing facility renovation, modernization, and expansion, or hiring and training of new employees for manufacturing purposes.

 

CURRENT VERSION OF TEXT

     As introduced.

  


An Act providing a corporation business tax credit for certain investment in manufacturing equipment and manufacturing facility renovation, modernization and expansion, or the hiring and training of new employees for manufacturing purposes, and supplementing P.L.1945, c.162 (C.54:10A-1 et seq.).

 

     Be It Enacted by the Senate and General Assembly of the State of New Jersey:

 

     1.    a.   For privilege periods commencing on or after January 1, 2024 but before January 1, 2026, a taxpayer shall be allowed a credit against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), in an amount equal to 10% of the amount paid during the privilege period for:

     (1)   new manufacturing equipment installed at a new or existing manufacturing facility located within a State-designated Smart Growth Area, or

     (2)   the acquisition, construction, reconstruction, installation, or erection of improvements or additions that result in the renovation, modernization or expansion of a manufacturing facility located within a State-designated Smart Growth Area, or

     (3)   the employment of any new full-time employee hired and retained for no less than 365 days after the effective date of this act, and who receives qualified manufacturing related job training within six months of employment.  For the purposes of this paragraph, "full time employee" shall not include an employee who is a resident of another state and whose income is not subject to the "New Jersey Gross Income Tax Act, " N.J.S.54A:1-1 et seq., unless that state has entered into a reciprocity agreement with the State of New Jersey.  An employer shall receive the greater of 10% of the cost of training, salary, and benefits, which shall include medical and pension contributions paid by the employer, or the deduction to which the employer would be entitled under existing law.

     An unused credit may be carried forward, if necessary, for use in the seven privilege periods following the privilege period for which the credit is allowed.

     b.    Credit shall not be allowed under P.L.1993, c.170 (C.54:10A-5.4 et seq.), P.L.1993, c.171 (C.54:10A-5.16 et al.), P.L.1993, c.175 (C.54:10A-5.24), or P.L.2001, c.321 (C.54:10A-5.31 et seq.) for expenditures for which a credit is allowed pursuant to subsection a. of this section.

     c.     The order of the application of the credit allowed under subsection a. of this section and any other credits allowed by law shall be based on the order in which completed applications are received by the Department of the Treasury.  The amount of the credit applied under this section against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) for a privilege period, together with any other credits allowed against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), shall not exceed 50% of the tax liability otherwise due and shall not reduce the tax liability to an amount less than the statutory minimum provided in subsection (e) of section 5 of P.L.1945, c.162 (C.54:10A-5).

     d.    As used in this section:

     "Manufacturing equipment" means machinery, apparatus or equipment used in the production of tangible personal property that is eligible for the sales tax exemption pursuant to subsection a. of section 25 of P.L.1980, c.105 (C.54:32B-8.13);

     "Smart growth area" means Planning Area 1 (Metropolitan), Planning Area 2 (Suburban), or a designated center or designated growth center in an endorsed plan; a smart growth area and planning area designated in a master plan adopted by the New Jersey Meadowlands Commission pursuant to subsection (i) of section 6 of P.L.1968, c.404 (C.13:17-6); a growth area designated in the comprehensive management plan adopted pursuant to section 7 of the "Pinelands Protection Act," P.L.1979, c.111 (C.13:18A-8); any area designated for growth in the Highlands regional master plan adopted by the Highlands Water Protection and Planning Council pursuant to P.L.2004, c.120 (C.13:20-1 et al.); a transit village; an urban enterprise zone designated pursuant to P.L.1983, c.303 (C.52:27H-60 et seq.) or P.L.2001, c.347 (C.52:27H-66.2 et al.); an area determined to be in need of redevelopment or rehabilitation pursuant to P.L.1992, c.79 (C.40A:12A-1 et al.) and as approved by the Department of Community Affairs; any area on which a green building conversion redevelopment project is located; and federally owned land approved for closure under a federal Base Realignment Closing Commission action;

     "Manufacturing facility" means a business location, including but not limited to a factory, mill, or plant, at which more than 50% of the business personal property that is housed in the facility is manufacturing equipment; and

     "Qualified manufacturing related job training" means (1) occupational skills training or classroom instruction in performing a job within the manufacturing industry that the trainee receives or shall have received as an enrolled student at a county vocational school or county college in this State, or at any other institution of post-secondary education located in this State possessing such accreditation as the Director of the Division of Taxation in the Department of the Treasury shall require, or (2) on-the-job training in such a job at premises located in this State owned and operated by the trainee’s employer.

     On or before January 1, 2027, the Director of the Division of Taxation in the Department of the Treasury shall prepare and submit a report to the Governor and the Legislature, in accordance with section 2 of P.L.1991, c.164 (C.52:14-19.1), addressing the credits allowed pursuant to subsection a. of this section.  The report shall include the total value of credits allowed for each tax year, the total number of qualified employees for which a credit was allowed for each tax year, information on the division’s experience in administering the credits allowed pursuant to subsection a. of this section, including, but not limited to, a description of increased workload associated with the credit, and an analysis as to the effectiveness of the credits as an incentive for encouraging the employment of new manufacturing employees.

 

     2.    This act shall take effect immediately and apply to amounts paid in privilege periods beginning after the date of enactment.

 

 

STATEMENT

 

     This bill allows a taxpayer to apply for a corporation business tax credit equal to either:

·        10% of the costs of new manufacturing equipment installed at a new or existing manufacturing facility located in a Smart Growth Area within this State, or

·        10% of the costs of improvements or additions that result in the renovation, modernization or expansion of a manufacturing facility located in a Smart Growth Area, or

·        with respect to the employment of any new full-time employee hired and retained for at least 365 days following the effective date of the bill, the greater of 10% of the costs of training, salary, and benefits, including employer paid medical and pension contributions, or the deduction to which the employer would be entitled under existing law.

     The bill provides that expenditures in Smart Growth Areas for manufacturing equipment and manufacturing facility renovation, modernization, and expansion for which a credit is allowed under this bill will not be expenditures for which a credit will be allowed under the New Jobs Investment Tax Credit, the Manufacturing and Employment Investment Tax Credit, the Research and Development Credit, or the Effluent Treatment and Conveyance Equipment Credit.

     The bill defines "manufacturing equipment" as machinery, apparatus or equipment used in the production of tangible personal property that is eligible for the sales tax exemption for manufacturing equipment.  That is machinery, apparatus, or equipment for use or consumption directly and primarily in the production of tangible personal property by manufacturing, processing, assembling, or refining, whose use is not incidental to those activities, and which has a useful life of more than one year. The bill defines a "manufacturing facility" as a business location, including but not limited to a factory, mill, or plant, at which more than 50% of the business personal property that is housed in the facility is manufacturing equipment.

     "Qualified manufacturing related job training" that would be eligible for a credit under the bill includes instruction through a county vocational school or county college within the State, instruction through any institution of post-secondary education located in the State that is accredited for this purpose by the Director of the Division of Taxation in the Department of the Treasury, and on-the-job training at sites within the State that are owned and operated by the trainee's employer.

     The bill also requires the Director of the Division of Taxation to submit a report to the Governor and the Legislature, on or before January 1, 2027, that includes a description of any increased departmental workload associated with administering the credit and an analysis of the effectiveness of the credit as an incentive for encouraging the employment of new manufacturing employees.