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States look to investment tax credits to increase economic growth in DE, NJ, TN

June 14, 2018

Over the past few weeks, Delaware, New Jersey, and Tennessee have proposed, announced or expanded investment tax credit programs to spur job creation and innovation. In Delaware, Gov. John Carney signed the Angel Investor Job Creation and Innovation Act, while Tennessee is expanding its Angel Tax Credit criteria, and New Jersey is proposing establishing innovation zones and tax credits for high-tech businesses within those zones.

The Delaware act establishes a refundable tax credit starting in 2019 of up to 25 percent for qualified investments in the state’s startups and small businesses. Under the act, the state’s Division of Small Business is required to create and publish an application for startups looking to participate in the program in calendar year 2019 by November 1, 2018. It also requires investments be made to fund business activities in select industry areas such as agriculture, manufacturing, wildlife preservation, environmental science, financial technology, and transportation as well as firms from other high technology fields.

In Tennessee, Gov. Bill Haslam and state lawmakers expanded the qualification criteria for the Angel Tax Credit. Through the passage of HB 2217, angel investors can now qualify for a tax credit on indirect investments in a Tennessee startup made through an angel investment network fund or similarly structured investment vehicle. Previously, the state only provided tax credits for direct investment in startups. LaunchTN — a statewide venture development organization — lauded this change.

New Jersey lawmakers proposed SB 848 that would allow the state’s Economic Development Authority to establish innovation zones around Camden, New Brunswick, and Newark, as well as provide tax incentives for businesses that create high-tech jobs within those zones. Each of the proposed innovation zones would be geographically located next to research institutions in those cities. High-tech businesses located in those zones would be eligible for a tax credit of $4,000 per year for each job that they create (minimum of 10 jobs created). Companies could receive an additional $1,000 per year for each job that is filled by someone who received an academic degree within the past 12 months.


Delaware, New Jersey, Tennesseeangel capital, tax credits