| Corporation Business Tax (CBT) |
The primary New Jersey corporate income tax liability against which the R&D tax credit is applied. |
| N.J.S.A. 54:10A-5.24 |
The specific New Jersey state statute that formally establishes and governs the Research and Development Tax Credit. |
| Qualified Research Expenses (QREs) |
Eligible costs including wages, supplies, and contract research payments defined under IRC §41 for credit calculation. |
| New Jersey Qualified Research Expenses |
QREs specifically incurred for research activities physically conducted within the State of New Jersey. |
| Basic Research Payments |
Payments made to qualified non-profit organizations or universities for original scientific investigation without specific commercial objectives. |
| Excess Qualified Research Expenses |
The amount by which current year qualified research expenses exceed the calculated base amount. |
| Base Amount (NJ R&D Credit) |
A calculated benchmark based on historical gross receipts and research spending used to determine the credit. |
| Credit Percentage (10%) |
The statutory rate applied to the excess qualified research expenses to calculate the New Jersey credit. |
| Regular Credit Method (Traditional) |
A calculation method comparing current spending to a fixed-base percentage derived from historical activity. |
| Alternative Simplified Credit (ASC) Method |
A simplified calculation method using a rolling average of the prior three years' qualified research expenses. |
| Federal Form 6765 |
The IRS tax form used to claim the federal credit, often referenced for New Jersey calculations. |
| New Jersey Tax Form 306 |
The specific New Jersey state tax form required to calculate and claim the R&D Tax Credit. |
| Internal Revenue Code (IRC) Section 41 |
The federal tax code section defining qualified research activities and expenses adopted by New Jersey. |
| IRC Section 174 |
Federal code section governing the deduction and amortization of research and experimental expenditures. |
| Four-Part Test |
The set of four mandatory criteria that activities must meet to qualify as eligible research. |
| Technological in Nature |
Requirement that research rely on principles of physical or biological sciences, engineering, or computer science. |
| Permitted Purpose |
Research aimed at improving the performance, reliability, quality, or functionality of a business component. |
| Elimination of Uncertainty Test |
The process of discovering information to overcome uncertainty regarding capability, method, or appropriate design. |
| Process of Experimentation Test |
Evaluating technical alternatives through testing, modeling, or simulation to resolve design or capability uncertainty. |
| Research Conducted in this State |
Statutory requirement that only expenses for research activities physically performed within New Jersey are eligible. |
| Credit Carry Forward |
The ability to apply unused R&D tax credits to offset tax liability in future tax years. |
| Standard Carry Forward Period (7 years) |
The default duration of seven years that unused New Jersey R&D credits can be carried forward. |
| Extended Carry Forward Period (15 years) |
An extended 15-year carryover period available specifically for taxpayers in priority high-technology industries. |
| Priority Technology Fields |
Designated high-tech sectors eligible for the extended 15-year carryover of unused tax credits. |
| Advanced Computing |
Technologies involving computing hardware, software, and AI eligible for the extended carryover period. |
| Biotechnology |
Research involving biological systems to develop products, eligible for the 15-year extended credit carryover. |
| Advanced Materials |
Development of materials with superior properties eligible for the extended 15-year credit carryover. |
| Electronic Device Technology |
Research into semiconductors and micro-electronics eligible for the extended 15-year credit carryover. |
| Environmental Technology |
Methods for preventing or reducing environmental threats eligible for the extended 15-year credit carryover. |
| Medical Device Technology |
Development of therapeutic or diagnostic medical devices eligible for the extended 15-year credit carryover. |
| Nonrefundable Credit |
A credit that can reduce tax liability to a minimum but cannot generate a cash refund. |
| Minimum Tax Assessment |
The statutory floor below which the R&D credit cannot reduce a corporation's tax liability. |
| Combined Group |
A group of related companies filing a unitary New Jersey return sharing tax credits and liabilities. |
| Taxable Member (Combined Group) |
A member of a combined group that has sufficient nexus in New Jersey to be taxed. |
| Managerial Member |
The entity designated to handle tax filings and payments on behalf of a combined group. |
| S Corporation Limitations |
Restrictions preventing S Corps from claiming credits directly; credits must flow through to shareholders. |
| Qualified Subchapter S Subsidiary (QSSS) |
A subsidiary of an S Corporation treated as a division of the parent for tax purposes. |
| Pass-Through to Shareholders |
The mechanism where credits earned by an S Corp flow to individual shareholders' personal returns. |
| NJEDA Tax Certificate Transfer Program |
Program allowing unprofitable technology or biotech companies to sell net operating losses and R&D credits. |
| Unprofitable Technology or Biotech Firms |
Companies with net operating losses eligible to monetize credits through the NJEDA Transfer Program. |
| Transferable Tax Benefits |
R&D credits or NOLs that eligible unprofitable companies can sell to other New Jersey taxpayers. |
| Lifetime Cap on Surrendered Benefits ($20 million) |
The maximum aggregate amount of tax benefits a single company can surrender over its lifetime. |
| Annual Pool of Transferable Credits ($75 million) |
The total state funding allocated annually for the Technology Business Tax Certificate Transfer Program. |
| Gross Receipts (for R&D purposes) |
Total income from all sources less returns and allowances, used to calculate the base amount. |
| Returns and Allowances |
Deductions from total gross receipts for returned goods or price adjustments affecting the base calculation. |
| Corporation Business Tax R&D Credit Deduction |
The rule generally disallowing a simultaneous deduction for research expenses if the credit is claimed. |
| Addback of Research Expenditures |
Requirement to add federal R&D deductions back to state income if the NJ credit is utilized. |
| Cannabis Licensees |
Specific tax provisions allowing NJ cannabis businesses to deduct expenses despite federal IRC 280E restrictions. |
| Qualified Small Business Payroll Offset |
A provision allowing certain small businesses to apply R&D credits against payroll tax liabilities. |
