Tech startups in the state will see increased support after to a bill sponsored by Assemblyman Christopher P. DePhillips and signed into law by Governor Murphy on June 30.
The bipartisan legislation, A5604, increases the angel-investor tax credit from 10 percent to 20 percent.
“Emerging technology businesses and angel investors are creating jobs and opportunities. It’s important we work to keep these innovative companies in our state,” said DePhillips (R-Bergen). “New Jersey is in a tough battle with Massachusetts, New York, Pennsylvania, North Carolina and California. We have to fight to keep innovation jobs right here in New Jersey.”
The tax credit program is intended to encourage investment in advanced computing, biotechnology, life sciences, electronic and medical device technology, and information, mobile communications and renewable energy technology businesses.
“This legislation will give us a chance to be true leaders in innovation,” said DePhillips, who served on the state’s Biotechnology Task Force and currently sits on the Assembly Science, Innovation and Technology Committee. “The entrepreneurs I’ve spoken to have said they need private investment. This will help meet that need.”
A 2017 economic report by McKinsey & Co., an international management consulting firm, showed the lack of fast-growing young firms and higher proportion of older corporations is contributing to the state’s sluggish economy. Young companies can quickly double in size and add jobs for many years while mature businesses generate few new jobs.
To qualify for the tax credit, the emerging technology business must employ fewer than 225 employees and at least 75 percent must work in the state. If the start-up is located in an opportunity zone, low-income community, or is a minority or women-owned business, the tax credit is increased to 25 percent. The maximum allowed credit is $500,000 for each qualified investment and the program is capped at $25 million annually.