Bill Text: NJ A4021 | 2026-2027 | Regular Session | Introduced
Bill Title: Provides CBT and gross income tax credits for certain energy infrastructure upgrades.
Sponsorship: Partisan Bill (Republican 1)
Status: (Introduced) 2026-02-12 - Introduced, Referred to Assembly Telecommunications and Utilities Committee [A4021 Detail]
Download: New_Jersey-2026-A4021-Introduced.html
Sponsored by:
Assemblyman ALEX SAUICKIE
District 12 (Burlington, Middlesex, Monmouth and Ocean)
SYNOPSIS
Provides CBT and gross income tax credits for certain energy infrastructure upgrades.
CURRENT VERSION OF TEXT
As introduced.
An Act providing tax credits for certain energy infrastructure upgrades and supplementing P.L.1945, c.162 (C.54:10A-1 et seq.) and Title 54A of the New Jersey Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. As used in this section:
"Board" means the Board of Public Utilities.
"Director" means Director of the Division of Taxation in the Department of the Treasury.
"Division" means the Division of Taxation in the Department of the Treasury.
"Generator" means a person who owns or operates an electric energy generation facility in the State that produces electric energy for sale.
b. For privilege periods beginning on or after the January 1 next following the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), and subject to the limitations of subsection c. of this section, a taxpayer who is a generator and who demonstrates a five percent increase in electric energy generated pursuant to paragraph (1) of this subsection shall be allowed a credit against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), to be calculated as provided in paragraph (2) of this subsection, to compensate the taxpayer for certain costs incurred in the installation and deployment of upgrades to an existing electric energy generation facility.
(1) To qualify for the tax credit allowed pursuant to this section, a taxpayer shall apply, in a form and manner determined by the board, to the board for a certification that provides: (a) the upgrades made to the existing electric energy generation facility owned or operated by the taxpayer; (b) the amount, in kilowatt hours, of electric energy produced as a result of the upgrades along with the amount, in kilowatt hours, of electric energy produced annually prior to the upgrades; and (c) the amount of the tax credit calculated pursuant to paragraph (2) of this subsection.
The application to the board shall demonstrate how the upgrades were able to create an increase, at a minimum of five percent, of electric energy produced for sale. These upgrades may include, but are not limited to: improving energy efficiency, enhancing grid technologies, integration of distributed energy and storage resources, and increased integration of utility-scale renewables and storage. The application shall include receipts and documentation identifying the type and cost of each upgrade necessary to increase electric energy production, and any other information determined to be relevant by the board. The board shall transmit a copy of any certification issued pursuant to this subsection to the taxpayer and the director.
(2) The amount of the credit authorized pursuant to this section shall not exceed the lesser of:
(a) 75 percent of the total costs incurred by the taxpayer after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill) for upgrades to the generator's electric power generation system, including any permit costs as required by the State or local government; or
(b) $5,000,000.
c. The director shall prescribe the order of priority of the application of the tax credit allowed pursuant to this section, and any other credits allowed against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) for the privilege period. The amount of the credit applied under this section against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) for a privilege period, together with any other credits allowed by law shall not reduce the tax liability to an amount less than the statutory minimum provided in subsection e. of section 5 of P.L.1945, c.162 (C.54:10A-5). The amount of the tax credit otherwise allowable under this section which cannot be applied for the privilege period may be carried forward, if necessary, to the four privilege periods following the privilege period for which a portion of the tax credit was allowed.
d. The value of tax credits provided by the director pursuant to this section and pursuant to section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall not exceed a cumulative total of $100 million.
e. No tax credit shall be allowed pursuant to this section for any costs or expenses included in the calculation of any other tax credit or exemption granted pursuant to a claim made on a tax return filed with the director, or included in the calculation of an award of business assistance or incentive, for a period of time that coincides with the privilege period for which a tax credit pursuant to this section is allowed.
f. The board, in consultation with the director, shall adopt, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), rules and regulations as are necessary to implement the provisions of this section.
g. No later than five years after the effective date of this section, the division shall prepare and submit to the Governor, the State Treasurer, and, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), to the Legislature, a report that, at a minimum, summarizes the effectiveness of the tax credit in incentivizing upgrades to existing electric energy generation systems.
2. a. As used in this section:
"Board" means the Board of Public Utilities.
"Director" means Director of the Division of Taxation in the Department of the Treasury.
"Division" means the Division of Taxation in the Department of the Treasury.
"Generator" means a person owning, controlling, or operating a facility that produces electric energy for sale.
b. For privilege periods beginning on or after the January 1 next following the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), and subject to the limitations of subsection d. of this section, a taxpayer who is a generator and who demonstrates a five percent increase in electric energy generated pursuant to paragraph (1) of this subsection shall be allowed a credit against the tax otherwise due under the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., to be calculated as provided in paragraph (2) of this subsection, to compensate the taxpayer for certain costs incurred in the installation and deployment of upgrades to an existing electric energy generation facility.
(1) To qualify for the tax credit allowed pursuant to this section, a taxpayer shall apply to the board, in a form and manner determined by the board, for a certification that provides: (a) the upgrades made to the existing electric energy generation facility owned or operated by the taxpayer; (b) the amount, in kilowatt hours, of energy produced as a result of upgrades along with the amount, in kilowatt hours, of electric energy produced annually prior to the upgrades; and (c) the amount of the tax credit calculated pursuant to paragraph (2) this subsection.
The application to the board shall demonstrate how the upgrades were able to create an increase, of at least five percent, in electric energy produced for sale. These upgrades may include, but are not limited to: improving energy efficiency, enhancing equipment technologies, integration of distributed energy and storage resources, and increased integration of renewable energy sources and storage systems. The application shall include receipts and documentation identifying the type and cost of each upgrade necessary to increase electric energy production and any other information determined to be relevant by the board. The board shall transmit a copy of any certification issued pursuant to this subsection to the taxpayer and the director.
(2) The amount of the credit authorized pursuant to this section shall not exceed the lesser of:
(a) 75 percent of the total costs incurred by the taxpayer after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill) for upgrades necessary to increase power production and electricity to the grid, including any permit costs required by the State and local government; or
(b) $5,000,000.
c. The order of priority of the application of the credit allowed pursuant to this section, and any other credits allowed against the tax imposed pursuant to N.J.S.54A:1-1 et seq. for a taxable year, shall be as prescribed by the director. The amount of the credit applied under this section against the New Jersey gross income tax imposed pursuant to N.J.S.54A:1-1 et seq. for a taxable year, when taken together with any other payments, credits, deductions, and adjustments allowed by law, shall not reduce a taxpayer's tax liability to an amount less than zero. The amount of the tax credit otherwise allowable under this section which cannot be applied for the taxable year due to the limitations of this section or other provisions of N.J.S.54A:1-1 et seq. may be carried forward, if necessary, to the four taxable years following the taxable year for which the tax credit was allowed.
d. No tax credit shall be allowed pursuant to this section for any costs or expenses included in the calculation of any other tax credit or exemption granted pursuant to a claim made on a tax return filed with the director, or included in the calculation of an award of business assistance or incentive, for a period of time that coincides with the taxable year, for which a tax credit authorized pursuant to this section is allowed.
e. The value of tax credits provided by the director pursuant to this section and pursuant to section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall not exceed a cumulative total of $100 million.
f. (1) A business entity that is classified as a partnership for federal income tax purposes shall not be allowed a tax credit pursuant to this section directly, but the amount of tax credit of a taxpayer in respect to distributive share of entity income, shall be determined by allocating to the taxpayer that proportion of the tax credit acquired by the entity that is equal to the taxpayer's share, whether or not distributed, of the total distributive income or gain of the entity for its taxable year ending within or with the taxpayer's taxable year.
(2) A New Jersey S Corporation shall not be allowed a tax credit pursuant to this section directly, but the amount of the tax credit of a taxpayer in respect of a pro rata share of S Corporation income, shall be determined by allocating to the taxpayer that proportion of the tax credit acquired by the New Jersey S Corporation that is equal to the taxpayer's share, whether or not distributed, of the total pro rata share of S Corporation income of the New Jersey S Corporation for its privilege period ending within or with the taxpayer's taxable year.
g. The board, in consultation with the director, shall adopt, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), rules and regulations as are necessary to implement the provisions of this section.
h. No later than five years after the effective date of this section, the division shall prepare and submit to the Governor, the State Treasurer, and, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), to the Legislature, a report that, at a minimum, summarizes the effectiveness of the tax credit in incentivizing upgrades to existing electric energy generation systems.
3. This act shall take effect immediately.
STATEMENT
This bill establishes tax incentives for taxpayers whose upgrades to existing energy infrastructure creates an increase in electricity to the grid. Specifically, the bill provides a tax credit against the corporation business tax and the gross income tax based on the costs of upgrades which result in an increase of at least five percent in energy generation that is transmitted to the State's electrical grid. The tax credit is available to anyone who is a generator and demonstrates a five percent increase in electric energy. The bill defines generator as person owning, controlling, or operating a facility that produces electric energy for sale. The amount of the credit is equal to the lesser of: 75 percent of the total costs of upgrades made after the bill's effective date or $5,000,000.
Under the bill, the taxpayer is required to provide the Board of Public Utilities (BPU) a certification that shows: 1) the upgrades made to the existing energy production infrastructure owned and operated by the taxpayer; 2) the amount, in kilowatt hours, of energy produced as a result of upgrades along with the amount, in kilowatt hours, of energy produced prior to the upgrades; and 3) the amount of the tax credit. The application to BPU should demonstrate how exactly the upgrades were able to create an increase, of at least five percent, in electricity transmitted to the grid. These upgrades may include, but are not limited to: improving energy efficiency, enhancing equipment technologies, integration of distributed energy and storage resources, and increased integration of renewable energy sources and storage systems. Additionally, the application should include receipts and documentation identifying the type and cost of each upgrade necessary to increase power production and any other information determined relevant by the board.
The bill requires BPU to transmit a copy of any certification issued to the taxpayer and the Director of the Division of Taxation in Department of the Treasury (director). The bill would also limit the cumulative total of tax credits awarded pursuant to the bill to $100 million. The bill would require, no later than five years after the bill's effective date, the division to prepare and submit to the Governor, the State Treasurer, and the Legislature a report that, at a minimum, summarizes the effectiveness of the tax credit in incentivizing upgrades to existing energy generation infrastructure. Finally, the bill directs BPU, in consultation with the director, to adopt rules and regulations to effectuate the provisions of the act.
