Last week Governor Murphy approved legislation, Assembly bill 4495, which contained a number of technical tax changes, including the restoration of the exemption from Gross Income Tax (“GIT”) for the sale of Grow New Jersey tax credits by pass-through entities.
Since, pass-through businesses do not pay corporation business tax, these businesses must sell their Grow New Jersey tax credits to monetize the benefits. At the end of 2017, legislation was enacted which provided an exemption from GIT for the sale of these tax credits. However, as part of a myriad of tax changes enacted this past summer via P.L. 2018, c.48, the GIT exemption was eliminated.
As part of Assembly bill 4495, GIT will not be imposed on the sale of Grow New Jersey tax credits issued pursuant to an award approved by the New Jersey Economic Development Authority prior to July 1, 2018 regardless of when the sale of the tax credits occurs. This is a welcome development and correction for New Jersey tax and economic development policy.