Provides research and development tax credit under gross income tax.
Impact
The enactment of A4023 is expected to have a positive effect on New Jersey’s economy by driving both technological development and job creation. With the inclusion of small businesses in this credit system, there is a potential for enhanced competitive positioning compared to larger corporations. This legislation could encourage local companies to undertake research projects that they might otherwise set aside due to expense, thereby contributing to a surge in innovation and productivity across various sectors.
Summary
Assembly Bill A4023, introduced in the New Jersey Legislature, aims to establish a gross income tax credit for taxpayers incurring research and development (R&D) expenses. The bill's primary objective is to stimulate R&D activities within the state by offering a tax incentive similar to those available under federal tax codes. By allowing a credit equal to 10% of qualified R&D expenditures beyond a specified base amount, the bill is designed to encourage businesses to increase their investment in innovative activities that can lead to significant technological advancements.
Contention
While the bill is generally viewed favorably among businesses, there may be potential contention regarding its fiscal impact on state revenue. Critics might argue that increased tax credits could lead to significant losses in state income if not managed correctly. Additionally, there could be debates about the effectiveness of such tax incentives in truly driving R&D investments, with some stakeholders advocating for alternative strategies to foster innovation in New Jersey.