LEGISLATIVE FISCAL ESTIMATE
[First Reprint]
SENATE, No. 4070
STATE OF NEW JERSEY
221st LEGISLATURE
DATED: OCTOBER 29, 2025
SUMMARY
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Synopsis: |
Establishes Fusion Energy and Technology Incentive Program in EDA to encourage use of power plants for fusion energy and technology purposes; authorizes funds in Global Warming Solutions Fund to support fusion energy and technology facilities. |
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Type of Impact: |
Annual State revenue loss. Increase in State costs. |
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Agencies Affected: |
New Jersey Economic Development Authority. |
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Office of Legislative Services Estimate |
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Fiscal Impact |
FY 2026 & Thereafter |
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Direct State Revenue Loss |
Indeterminate |
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Indirect State Revenue Gain |
Indeterminate |
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State Cost Increase |
Indeterminate |
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· The Office of Legislative Services (OLS) concludes that the bill will result in an indeterminate net loss of State revenues over a multi-year period. Several factors, such as the value of capital investments made by eligible property owners and the number of New Jersey-based employees employed by fusion energy and fusion technology companies, will affect the direct and indirect revenue impacts of the bill.
· The bill caps the combined amount of tax credits that may be awarded under the Fusion Energy and Technology Incentive Program at $15 million annually without limiting the duration of the program. The amount of tax credits claimed under the program in each tax year and the resultant State revenue loss will fluctuate annually, depending on individual taxpayer decisions and the maturation of the fusion energy sector in New Jersey.
· The OLS finds that the bill would result in an indeterminate State cost increase for the Economic Development Authority to establish and administer the new program.
· The OLS notes the bill authorizes, but does not require, the authority to allot a portion of its Global Warming Solutions Fund proceeds to support fusion energy or fusion technology facilities.
BILL DESCRIPTION
The bill establishes the Fusion Energy and Technology Incentive Program in the Economic Development Authority to encourage the use and development of power plants by fusion energy or fusion technology companies. The program consists of two components, including the issuance of tax credits to: (1) eligible property owners that lease space on the site of a power plant for use by one or more fusion energy or fusion technology companies; and (2) fusion energy or fusion technology companies that operate, or seek to operate, one or more fusion energy or fusion technology facilities on the site of a power plant.
The bill allows the authority to issue up to $5 million in tax credits annually to eligible property owners that lease space on the site of a power plant to fusion energy or fusion technology companies. An eligible property owner may apply to the authority to receive tax credits in an amount equal to the sum of: (1) 15 percent of the rent paid to the eligible property owner by any fusion energy or fusion technology companies leasing space on the site of the power plant; and (2) 35 percent of the capital investments incurred by the eligible property owner, prior to the date of the application, provided that the capital investments were necessary to enable the site of the power plant to be leased and used by a fusion energy or fusion technology company.
The bill also authorizes the authority to issue up to $10 million in tax credits annually to fusion energy or fusion technology companies that operate, or seek to operate, one or more fusion energy or fusion technology facilities at the site of a power plant. A fusion energy or fusion technology company may apply to the authority to receive tax credits equal to 35 percent of the capital investments incurred by the company related to the preparation, construction or improvement of any fusion energy or fusion technology facility that is actively operated by the company on the site of the power plant. If a fusion energy or fusion technology company applies for a tax credit before it is actively engaged in the operation of a fusion energy or fusion technology facility, the authority is not permitted to issue tax credits to the company until after the facility is actively operated by the company.
Additionally, the bill authorizes the authority to use moneys in the Global Warming Solutions Fund to provide grants or other financial assistance to commercial, institutional, and industrial entities to support fusion energy facilities or fusion technology facilities. Notably, the fund serves as the repository for moneys accruing to the State from the auctioning of emissions allowances through the Regional Greenhouse Gas Initiative.
FISCAL ANALYSIS
EXECUTIVE BRANCH
None received.
OFFICE OF LEGISLATIVE SERVICES
Tax Credit Awards
The OLS concludes that the bill will result in an indeterminate net loss of State revenues over a multi-year period due to the awarding of tax credits to eligible property owners and fusion energy or fusion technology companies. Although the bill caps the combined amount of tax credits that may be awarded at $15 million annually, the bill does not limit the amount of tax credits that may be claimed in a single tax year. The OLS notes that any revenue loss will be ongoing because the bill does not place any limitations on the duration of the Fusion Energy and Technology Incentive Program. The amount of tax credits claimed under the program in each tax year will fluctuate annually, depending on individual taxpayer decisions and the maturation of the fusion energy sector in New Jersey. Moreover, the revenue losses associated with each issuance of tax credits may be spread out over several years because the bill allows unused tax credits awarded through the program to be carried forward for up to five privilege periods following the privilege period in which the credit was first allowed.
The direct State revenue loss may be partially offset by the indirect State revenue effects catalyzed through investments in fusion energy or fusion technology companies. An indirect State revenue gain may occur when an eligible property owner finances capital improvements to enable the site of a power plant to be leased and used by a fusion energy or fusion technology company, or when a fusion energy or fusion technology company elects to operate in the State solely due to the receipt of a tax credit subsidy. In this scenario, employees of the fusion energy or fusion technology company, as well as the employees of a business hired to perform the capital improvements may receive a salary or wage that is subject to the gross income tax. An eligible property owner or an employee may also spend their income on goods and services that are subject to the sales and use tax. Multiple factors will influence the magnitude of the direct and indirect revenue effects of the bill. These factors include the value of capital investments made in power plants, the number of fusion energy and fusion technology companies that lease space on the site of a power plant, and the salaries of fusion energy and fusion technology company employees located in New Jersey.
Use of Global Warming Solutions Fund Proceeds
The OLS finds that the bill would result in an indeterminate State cost increase for the authority to establish and administer the Fusion Energy and Technology Incentive Program. For example, the new program may necessitate additional staffing costs.
The OLS notes the bill authorizes, but does not require, the authority to allot a portion of its Global Warming Solutions Fund proceeds to support fusion energy or fusion technology facilities. Current law allocates 60 percent of the moneys deposited into the Global Warming Solutions Fund to the authority, while the remaining 40 percent is divided equally between the Board of Public Utilities and the Department of Environmental Protection. Given this limitation, the authority may choose to shift resources from programs and initiatives currently supported through its allocation of Global Warming Solutions Fund revenues to provide financial assistance to fusion energy or fusion technology facilities.
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Section: |
Revenue, Finance and Appropriations |
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Analyst: |
Staff Fiscal and Budget Analyst |
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Approved: |
Thomas Koenig Legislative Budget and Finance Officer |
This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.
This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).