Short answer. New Jersey's Corporation Business Tax research credit is 10 percent of in-state research spending over a base, plus 10 percent of basic research payments. It is non-refundable, but an unprofitable technology company can sell its unused credits and net operating losses for cash through the state's NJEDA transfer program.
Key facts
| Rate | 10% of New Jersey QRE over a base |
|---|---|
| Basic research payments | Plus 10% of payments to qualified organizations |
| Refundable | No, but credits are sellable via NJEDA |
| Carryforward | 7 years |
| Form | Form 306 (Corporation Business Tax) |
Two 10 percent slices
New Jersey's credit has a main rate and a university add-on.
The credit at N.J.S.A. 54:10A-5.24 is 10 percent of the excess of New Jersey qualified research expenses over a base amount, plus 10 percent of basic research payments to qualified organizations. Both halves count only research conducted in New Jersey. For privilege periods beginning on or after January 1, 2018, you use the same method you used federally, the regular fixed-base method or the Alternative Simplified Credit, applied to New Jersey expenses.
It is a Corporation Business Tax credit. New Jersey has no matching credit under the Gross Income Tax or the Pass-Through Business Alternative Income Tax, so the benefit reaches the company through the CBT return. You claim it on Form 306.
You can sell the credit
A non-refundable credit is worth nothing to a company with no tax. New Jersey's answer is to let you sell it.
The Technology Business Tax Certificate Transfer Program, run by the New Jersey Economic Development Authority, lets a qualifying technology company sell unused R&D credits and net operating losses for cash. You need fewer than 225 US employees, with at least 75 percent working in New Jersey. The benefits sell for at least 80 percent of their value, up to a lifetime cap of $20 million per company, through an annual pool.
For an unprofitable New Jersey software company, this is the difference between a credit you cannot use and cash this year.
If you hold it
Credit you keep carries forward, but the filing deadline is strict.
Unused credit that you do not sell carries forward seven privilege periods. You claim it on Form 306 with a timely original or amended CBT return; miss that filing and the carryforward is lost. The qualified research definition tracks federal Section 41, limited to New Jersey.
More on New Jersey's R&D credit
The full state overview, the federal Section 41 work it builds on, and related state guides:
Sources
Every claim on this page traces to a primary authority. Each source below is independent and verifiable.
- New Jersey Technical Bulletin TB-114, The New Jersey Research and Development Tax Credit (N.J.S.A. 54:10A-5.24) - New Jersey Division of Taxation
- New Jersey Form 306, Research and Development Tax Credit - New Jersey Division of Taxation
- NJEDA Technology Business Tax Certificate Transfer (NOL) Program - New Jersey Economic Development Authority
- 26 U.S.C. ยง 41 (credit for increasing research activities) - Cornell Law School, Legal Information Institute
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