Updated New Jersey Angel Tax Credit: Supporting Innovation While Protecting Investors

It has been exactly five years since New Jersey last reevaluated its strategy for encouraging investment in its Emerging Technology Business sector. With the passage and signing of Senate Bill S3189, significant changes to the New Jersey Angel Tax Credit will be enacted effective January 1, 2026. Below is a brief refresher of the program’s eligibility requirements, with any notable changes bolded:

Program Rule	Old Law (Pre-2026)	New Law (Effective 1/1/2026)
Base Credit %	20%	35%
Bonus Credit %	Extra 5% totaling 25% for a: Company located in an Opportunity Zone or a designated low-income area Company certified as woman-owned or minority-owned	Extra 5% totaling 40% for a: Company located in an Opportunity Zone or a designated low-income area Company is certified as woman-owned or minority-owned Qualified Venture Fund contractually committed to investing half its capital to diverse entrepreneurs, which is defined as being a certified woman-owned or minority-owned business
Qualifying Company Businesses	Advanced Computing Advanced Materials Biotechnology Electronic Devices Information Technology Life Sciences Medical Devices Mobile Communications Renewable Energy Technology	No change
Qualifying Company Activities	Qualified research expenses paid or incurred for research conducted in its most recent fiscal year prior to the Qualified Investment, or Conducts pilot scale manufacturing in New Jersey, or Conducts technology commercialization in New Jersey	No change
Qualifying Company Size	<225 employees, with at least 75% filling a position in New Jersey	<150 employees, with at least 75% filling a position in New Jersey
Qualified Investment	Non-refundable transfer of cash to a NJ Emerging Technology Business	No change
Per-Investment Credit	$500k	No change
Annual Program Limit	$35MM	$25MM
Non-refundable Application Fees	$500 for investment amounts of $50,000 or less $2,500 for investment amounts over $50,000 Extra 5% “approval fee” applied for qualified investments over $500,000	No change

Example: Taxpayer makes a qualified investment of $100k into a qualified New Jersey Emerging Technology Business.

	Old Law (Pre-2026)	New Law (Effective 1/1/2026)	New Law – Special Rate (Effective 1/1/2026)
Qualified Investment	$100,000	$100,000	$100,000
Base Credit %	20%	35%	40%
Gross Credit	$20,000	$35,000	$40,000
Non-refundable Application Fee	(2,500)	(2,500)	(2,500)

Net Benefit	$17,500	$32,500	$37,500

The New Jersey Angel Investor Tax Credit was established in 2013, and according to the “Activity Report” issued by the New Jersey Economic Development Authority, the annual program limit has never been reached. With the recent favorable adjustment to the base credit, companies recognized as Emerging Technology Businesses are likely to see a significant increase in investor interest, as investors will benefit from higher returns for the same investment amount. It’s essential to keep in mind that applications are processed on a first-come, first-served basis. Considering the $10MM reduction in the annual program limit, combined with the increased base credit, the limit may be reached. If that is the case, applications that were denied due to the limit restriction would be processed starting from the first day of the following calendar year. Applications will be prioritized according to the order in which they are received and completed, making it crucial to submit them in a timely manner.

Since 2013, W&G has been helping taxpayers navigate this unique program and is well-prepared to address any inquiries you may have.