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New Jersey Economic Recovery Act of 2020

By MICHELE D. SLOCUM, CPA

March 5, 2021

The challenges arising from the COVID-19 pandemic have been difficult to manage for many New Jersey-area businesses. The hardest-hit industries include food service, hospitality, entertainment, and recreation, as demand has plummeted since the pandemic began. According to IBIS World, this reality places New Jersey in a precarious situation because both food services and entertainment/recreation are top employment industries. The practical effect can be seen in state unemployment numbers, which still exceeded 7% at the end of 2020.

Although federal relief programs like the Paycheck Protection Program (PPP) have been helpful, more action is needed. On January 7, 2021, Governor Phil Murphy signed the New Jersey Economic Recovery Act of 2020 (Act) into law, providing additional relief measures, which we have summarized below.

Key Tax Incentive Programs

  • Main Street Recovery Financial Program – The Act provides $50M in funding for the Main Street Recovery Finance Program in loans, grants, and other guarantees to certain small businesses. The grants are available to those businesses with less than ten employees or less than $1M in annual revenue. Also, a new Main Street Recovery Fund is created to benefit certified women-owned and minority businesses.
  • Emerge Program Act – The Act provides tax credits to businesses located in qualified incentive areas that will make, acquire, or lease a capital investment, or that will create or retain new and existing full-time jobs, all subject to certain limitations.
  • Ignite Program – The program will provide start-up rent grants to collaborative workspaces.  The goal is to help early-stage innovation businesses.
  • Personal Protective Equipment Program – The program provides tax credits to qualified businesses that manufacture personal protective equipment (PPE).
  • NJ Aspire Program – The Act also created a program designed to provide tax credits to real estate developers to cover certain financing gap costs. The credit is equal to 50% of qualifying development costs and up to $50M for projects in targeted areas.
  • Historic Property Reinvestment Program – There are tax credits available for a portion of the costs incurred when rehabilitating historic properties. To qualify, the building must be on the National Register of Historic Places approved by the State Historic Preservation Officer. The tax credits are capped at $50M annually for six years and cannot exceed 40% of rehabilitation costs.
  • Brownfield Redevelopment Incentive Program – This is a one-time tax credit available to provide real estate developers funds to remediate polluted properties. The program is capped at $50M per year, and each project maximum is limited to $4M. It is important to note that projects are subject to prevailing wage requirements.
  • NJ Film & Digital Media Tax Credits – There is a new tax credit for qualifying expenses made in the production of films and digital media in the state. Credits for both productions require a minimum number of services to be purchased from New Jersey businesses. It is important to note there is $200M allocated over 13 years.
  • Food Desert Relief Program – New tax credits, grants, and loans are now available to businesses that establish and retain new grocery stores in so-called “food desert communities.” Tax credits of up to $40M annually (for a limit of six years) are available.

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The Economic Recovery Act provides access to an additional dimension of relief for Hamilton, Princeton, and Trenton-area small businesses. It becomes especially compelling when combined with federal tax relief, including the Employee Retention Tax Credit. If you have questions about the information outlined above or need assistance with a tax or accounting issue, Klatzkin can help. For additional information, click here to contact us. We look forward to speaking with you soon.

©2021 Klatzkin & Company LLP. The above represents our best understanding and interpretation of the material covered as of this post’s date and does not constitute accounting, tax, or financial advice. Please consult your advisor concerning your specific situation. 

About the Author

Michele is a Manager focused on serving the tax planning, reporting, and compliance needs of real estate, professional service and nonprofit organizations. She enjoys working to find tax-saving opportunities, many created through tax reform, including Section 199A deductions, bonus depreciation and capital gains deferral through investment in Qualified Opportunity Zones.    Going beyond the expected...

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