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.

S4031

SENATE, No. 4031

STATE OF NEW JERSEY

222nd LEGISLATURE

�

INTRODUCED MARCH 19, 2026

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, 2026 but before January 1, 2028, 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 section, 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, 2029,
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 the
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, 2029, 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.