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A4116
ASSEMBLY, No. 4116
STATE OF NEW JERSEY
222nd LEGISLATURE
�
INTRODUCED FEBRUARY 19, 2026
Sponsored by:
Assemblywoman� CAROL A. MURPHY
District 7 (Burlington)
SYNOPSIS
���� Establishes a manufacturing reinvestment account
program to incentivize capital investment and workforce training in New Jersey
with income tax rate reductions, deferrals, and accelerated deductions.
CURRENT VERSION OF TEXT
���� As introduced.
��
An Act
establishing a manufacturing reinvestment
account program, supplementing Title 54 of the Revised Statutes and Title 54A
of the New Jersey Statutes.
����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:
���� 1.��� a.� A qualified
manufacturer shall be allowed to deduct against entire net income for the
privilege period the amount contributed to a manufacturing reinvestment account
in the privilege period.� The deduction allowed pursuant to this subsection for
a privilege period shall not exceed $100,000.� Amounts contributed and deducted
pursuant to this subsection shall not be eligible for deduction or
capitalization upon disposition in a qualified reinvestment expenditure or
otherwise.
���� b.��� (1)� To the extent not
distributed from a manufacturing reinvestment account in the privilege period,
a qualified manufacturer�s entire net income shall not include earnings on a
manufacturing reinvestment account contribution or accrued deposit.
���� (2)�� To the extent
distributed and used for a qualified reinvestment expenditure in the privilege
period, deposits shall not be treated as entire net income, and earnings from a
manufacturing reinvestment account shall be included in entire net income, but
the earnings shall be subject to one-half of the rate of tax imposed pursuant
to section 5 of P.L.1945, c.162 (C.54:10A-5), except that this rate reduction
shall not apply to the computation of minimum tax due.� All other distributions
of deposits and earnings from a manufacturing reinvestment account shall be
included in a qualified manufacturer�s entire net income subject to the tax
imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5).
���� c.���� (1)� To qualify for the
tax benefits allowed pursuant to this section a taxpayer shall not deposit more
than $100,000 in the manufacturing reinvestment account for a privilege
period.� A taxpayer shall not be allowed more than one manufacturing reinvestment
account.� The tax benefits associated with a manufacturing reinvestment account
shall only apply to the five consecutive privilege periods beginning with the
privilege period in which the taxpayer first makes a deposit to the
manufacturing reinvestment account.� Amounts remaining in a manufacturing
reinvestment account after the fifth privilege period shall be deemed to be
distributed and previously not included earnings shall be included in entire
net income subject to the tax imposed pursuant to section 5 of P.L.1945, c.162
(C.54:10A-5).
���� (2)�� The amount of a
qualified reinvestment expenditure distribution from a manufacturing
reinvestment account representing previously not included account earnings to
be included in entire net income for the privilege period of distribution and
subject to the reduced rate of taxation allowed by this section shall be
determined by applying the percentage that the total distribution represents of
the total amount deposited by the taxpayer into the manufacturing reinvestment
account to the date of the distribution against the total amount of previously
not included earnings in the manufacturing reinvestment account to the date of
the distribution.
���� (3)�� The Director of the
Division of Taxation in the Department of the Treasury shall prescribe basis
adjustments for qualified reinvestment expenditure items to the extent required
and the order of application of deductions against entire net income relative
to the rate reduction allowed pursuant to this section.�
���� d.��� The Department of the
Treasury shall establish criteria and guidelines to qualify a manufacturer so
that the manufacturers may establish a reinvestment account pursuant to the
provisions of this section.
���� e.���� As used in this
section:
���� �Manufacturing facility� means
a commercial product production or assembly site located in New Jersey.
���� �Manufacturing reinvestment
account� means an interest bearing account that solely accepts cash deposits,
which is held by a New Jersey financial institution.
���� �New Jersey financial
institution� means a State or federally chartered bank, savings bank, savings
and loan association, or credit union with an office in this State.
���� �Qualified manufacturer� means
a taxpayer that is in a line of business involving manufacturing, is in good
standing with respect to State tax responsibilities, and employs no more than
fifty employees.
���� �Qualified reinvestment
expenditure� means the use of a manufacturing reinvestment account distribution
to make payment for: (1) machinery or equipment for use in the taxpayer�s
manufacturing facility; or (2) New Jersey personnel workforce training, development,
or expansion at the taxpayer�s manufacturing facility.
���� 2.��� a.� A qualified
manufacturer shall be allowed to deduct against gross income for the taxable
year the amount contributed to a manufacturing reinvestment account in the
taxable year.� The deduction allowed pursuant to this subsection for a taxable
year shall not exceed $100,000.� Amounts contributed and deducted pursuant to
this subsection shall not be eligible for deduction or capitalization upon
disposition in a qualified reinvestment expenditure or otherwise.
���� b.��� (1)� To the extent not
distributed from a manufacturing reinvestment account in the taxable year, a
qualified manufacturer�s gross income shall not include earnings on a
manufacturing reinvestment account contribution or accrued deposit.
���� (2)�� To the extent
distributed and used for a qualified reinvestment expenditure in the taxable
year, deposits shall not be treated as gross income, and earnings from a
manufacturing reinvestment account shall be included in gross income, but the
earnings shall be subject to one-half of the rate of tax imposed pursuant to
N.J.S.54A:2-1 with the earnings allocated to the taxpayer�s highest tax rate.� All
other distributions of deposits and earnings from a manufacturing reinvestment
account shall be included in a qualified manufacturer�s gross income subject to
the tax imposed pursuant to the �New Jersey Gross Income Tax Act,�
N.J.S.54A:1-1 et seq.
���� c.���� (1)� To qualify for the
tax benefits allowed pursuant to this section a taxpayer shall not deposit more
than $100,000 in the manufacturing reinvestment account for a taxable year.� A
taxpayer shall not be allowed more than one manufacturing reinvestment account.�
The tax benefits associated with a manufacturing reinvestment account shall
only apply to the five consecutive taxable years beginning with the taxable
year in which the taxpayer first makes a deposit to the manufacturing
reinvestment account.� Amounts remaining in a manufacturing reinvestment
account after the fifth taxable year shall be deemed to be distributed and
previously not included earnings shall be included in gross income subject to
the tax imposed pursuant to the �New Jersey Gross Income Tax Act,�
N.J.S.54A:1-1 et seq.
���� (2)�� The amount of a
qualified reinvestment expenditure distribution from a manufacturing
reinvestment account representing previously not included account earnings to
be included in gross income for the taxable year of distribution and subject to
the reduced rate of taxation allowed by this section shall be determined by
applying the percentage that the total distribution represents of the total
amount deposited by the taxpayer into the manufacturing reinvestment account to
the date of the distribution against the total amount of previously not
included earnings in the manufacturing reinvestment account to the date of the
distribution.
���� (3)�� The Director of the
Division of Taxation in the Department of the Treasury shall prescribe basis
adjustments for qualified reinvestment expenditure items to the extent required
and the order of application of deductions against gross income relative to the
rate reduction allowed pursuant to this section.�
���� d.��� The Department of the
Treasury shall establish criteria and guidelines to qualify manufacturers so
that the manufacturers may establish a reinvestment account pursuant to the
provisions of this section.
���� e.���� As used in this
section:
���� �Manufacturing facility� means
a commercial product production or assembly site located in New Jersey.
���� �Manufacturing reinvestment
account� means an interest bearing account that solely accepts cash deposits,
which is held by a New Jersey financial institution.
���� �New Jersey financial
institution� means a State or federally chartered bank, savings bank, savings
and loan association, or credit union with an office in this State.
���� �Qualified manufacturer� means
a taxpayer that is in a line of business involving manufacturing, is in good
standing with respect to State tax responsibilities, and employs no more than
fifty employees.
���� �Qualified reinvestment
expenditure� means the use of a manufacturing reinvestment account distribution
to make payment for: (1) machinery or equipment for use in the taxpayer�s
manufacturing facility; or (2) New Jersey personnel workforce training, development,
or expansion at the taxpayer�s manufacturing facility.
���� 3.��� This act shall take
effect immediately and apply to privilege periods and taxable years beginning
on or after the date of enactment.
STATEMENT
���� This bill would establish the
manufacturing reinvestment account program for the purpose of making it easier
for New Jersey�s small manufacturing businesses to invest in manufacturing
machinery and equipment, and in workforce development.� The bill would
incentivize capital investment and workforce training in New Jersey through the
use of tax reductions, deferrals, and deductions.
���� The program would be available
to manufacturing businesses that are current on their State tax obligations and
which have 50 or fewer employees.
���� The bill establishes three
types of incentives for qualified businesses through the gross income tax and
the corporation business tax:
���� (1) a tax deduction for
amounts deposited in a manufacturing reinvestment account for future use on
qualified capital purchases and workforce training;
���� (2) deferred taxation on
account earnings; and
���� (3) a rate reduction for the
earnings on account deposits, upon distribution.�
���� Under the program, a small
manufacturing business may deposit up to $100,000 in a manufacturing
reinvestment account annually for up to five years.� Earnings in an account are
not taxed until withdrawn.� For withdrawals made during an account�s five-year
life for spending on New Jersey based manufacturing equipment, machinery, or
workforce development, the business would receive a one-half rate reduction on
the withdrawn account earnings.� Nonqualified withdrawals are included in whole
in taxable income without the rate reduction on earnings.