The New Jersey state Legislature has introduced a bill to allow for companies in the state to create manufacturing reinvestment accounts, which would give them tax reductions, deferrals and deductions on manufacturing equipment and workforce training.
Specifically, the bill allows qualified manufacturers to make a deductible deposit into the new accounts of up to $100,000 annually for five years. Non-qualified expenditures from the account would not be deductible.
To qualify, a company must have no more than 50 employees and be in good tax standing. The bill also restricts qualified manufacturing reinvestment accounts “to those accounts offered by financial institutions in New Jersey to accept solely cash deposits and bear interest,” according to the language of the bill.
The measure would also allow for three levels of incentives to manufacturing companies: Initial contributions to the account would be deductible on company tax returns; taxes on interest and other revenue earned by the account would be deferred; and withdrawals would be taxed at half the corporate or gross income tax rate, provided they are used for qualified purposes.
The bill, S1143, is being sponsored by state Sen. Troy Singleton, D-7th District.
The New Jersey Business & Industry Association is hailing the new legislation.
“NJBIA has been working closely with the bipartisan Legislative Manufacturing Caucus, and this bill supports our efforts to reclaim New Jersey’s status as a leader in manufacturing,” said Andrew Musick, NJBIA vice president for taxation and economic development, in a statement. “New Jersey is home to 10,552 manufacturing firms, many of which are small businesses, and they employ nearly 250,000 people. Supporting manufacturing makes sense, and we thank Sen. Singleton for sponsoring this important piece of legislation.”