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Division of Taxation

Timing of New Jersey Qualified Research Expenditures

P.L. 2023, c. 96, signed into law on July 3, 2023, amended N.J.S.A. 54:10A-4(k)(11) for privilege periods beginning on and after January 1, 2022. Taxpayers that claim the Corporation Business Tax Research and Development Tax Credit for New Jersey qualified research expenditures can also deduct those New Jersey expenditures on their tax return in the same year as they claim the credit, rather than amortizing the expenditures. Taxpayers will record these amounts as "other deductions" on Schedule A, Part II. Taxpayers that amortized their New Jersey qualified research expenditures on the 2022 Corporation Business Tax return can file an amended return.

N.J.S.A. 54:10A-4(k)(11), which requires an addback of certain qualified research expenditures, only applies to New Jersey qualified research expenditures. Non-New Jersey qualified research expenditures are deductible in the same manner and with the same timing as they are for federal purposes. Thus, if you added back your non-New Jersey qualified research expenditures, you should file amended returns for years still within the statute of limitations.

Cannabis Licensees. P.L. 2023, c.50 decoupled the corporation business tax and gross income tax from the federal provisions that prohibit tax credits and deductions for cannabis businesses. However, it is applicable to tax years beginning on and after January 1, 2023 so these licensees are only eligible to utilize the amendment to N.J.S.A. 54:10A-4(k)(11) prospectively. See TB-106 for more information.

Last Updated: Wednesday, 10/25/23