New Jersey Research and Development Tax Credit
New Jersey Division of Taxation
10% of incremental QRE
NJ R&D credit — 20-yr carryforward, no cap
New Jersey's R&D tax credit offers 10% of qualified research expenses that exceed a calculated base amount, mirroring the federal incremental approach under IRC §41. Available to all entity types — C-corps, S-corps, partnerships, and sole proprietors — conducting qualified research in New Jersey. Non-refundable, with a 20-year carryforward. No annual program cap and no competitive allocation; it's a pure entitlement for eligible taxpayers.
- Funding type
- Tax Credit
- Level
- State
- Amount
- 10% of qualified research expenses exceeding the base amount (incremental). The base amount is the greater of: (1) actual NJ R&D expenses in a historical base period, or (2) 3.5% of current-year gross receipts. No annual program cap — every eligible taxpayer can claim. Non-refundable; unused credit carries forward 20 years.
- Realistic amount
- A NJ tech company with $500K in annual NJ QRE and a $300K base generates a $20,000 credit (10% × $200K incremental). Com…
- Deadline
- Rolling — claimed annually on NJ Corporation Business Tax return (Form CBT-100) or NJ Gross Income Tax return, using R&D credit schedule
- Status
- active
- States
- NJ
- Payment model
- tax offset
Who qualifies
- Business or individual conducting qualified research within New Jersey
- Eligible entity types: C corporations, S corporations, partnerships, and sole proprietors — all qualify
- Qualified research must satisfy the federal IRC §41 four-part test: technological in nature, intended to discover information, conducted via a process of experimentation, aimed at improving a business component
- Research must be conducted in New Jersey (NJ-located expenses only count)
- Taxpayer must have New Jersey Corporation Business Tax or Gross Income Tax liability against which to apply the credit (credit is non-refundable)
- No minimum QRE threshold — even modest NJ R&D spend can generate a credit if it exceeds the base
What it covers
Eligible expenses
- Wages and salaries paid to New Jersey employees directly performing qualified research activities
- 65% of amounts paid to New Jersey-based independent contractors for qualifying research services
- Supplies and materials consumed in the conduct of qualified research in New Jersey
- Lease or rental costs of New Jersey facilities used exclusively for qualified research
Ineligible expenses
- Research funded by grants, contracts, or reimbursements from third parties
- Research conducted outside New Jersey
- Social sciences, arts, humanities, and management-related research
- Routine testing, quality control, and post-production troubleshooting not involving technological uncertainty
- Software development for internal administrative functions (e.g., HR systems, accounting platforms)
How to apply
-
1
Identify and document NJ-located qualified research expenses
Segregate QREs for research activities conducted in New Jersey: wages for NJ-based employees on qualifying projects, NJ-located supply costs, and 65% of NJ contractor costs for qualifying research. Mirror the federal §41 four-part test for each project.
~8 hrs
-
2
Compute the NJ base amount
Calculate the base amount as the greater of: (a) historical average NJ QRE from the base period (typically 1984-1988), or (b) 3.5% of current-year NJ gross receipts. For startups without historical data, the NJ Division of Taxation provides an alternative simplified method (consult TB-114).
~4 hrs
-
3
Calculate the 10% incremental credit
Apply 10% to the amount by which current-year NJ QRE exceeds the base amount. If this is your first NJ R&D credit claim, review TB-114(R) for startup-year base period elections. Track any excess credit for the 20-year carryforward schedule.
~2 hrs
-
4
File the credit on your NJ tax return
Corporate filers: attach the R&D credit schedule to Form CBT-100. Individual/pass-through filers: claim on NJ Gross Income Tax return. NJ R&D credit reduces tax liability dollar-for-dollar. Any unused credit carries forward up to 20 tax years — record the carryforward amount and year for future returns.
~2 hrs
Industry & certifications
NAICS codes: 541714, 541715, 325, 334, 336, 517
NJ's 20-year carryforward is one of the longest in the US — loss-year startups can bank credits for two decades. No cap, no competition, no pre-approval: file and claim.
Deadline & timing
No pre-certification required. Claim the credit on the annual NJ tax return. Corporate filers use Form CBT-100 with the R&D credit schedule attached. NJ corporate returns are due 30 days after the federal due date. See NJ Division of Taxation Technical Bulletin TB-114(R) (published December 2025) for current guidance.
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Last reviewed 2026. GrantCompass is an independent funding-discovery tool and is not affiliated with any government agency. Always confirm details on the official program page.