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New Jersey Free Printable Form 305 Manufacturing Equipment and Employment Tax Credit for 2024 New Jersey Manufacturing Equipment and Employment Investment Tax Credit and Instructions

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Manufacturing Equipment and Employment Investment Tax Credit and Instructions
Form 305 Manufacturing Equipment and Employment Tax Credit

New Jersey Corporation Business Tax Manufacturing Equipment and Employment Investment Tax Credit FORM 305 2023 Name as Shown on Return Federal ID Number Unitary ID Number, if applicable NU Read the instructions before completing this form. Combined Return Filers The taxpayer is included as a taxable member on a New Jersey combined return. See instructions. Fill in oval if member is not sharing its credit with other members of the group. Part I Credit Calculation for Investment in Qualified Equipment in New Jersey in the CURRENT YEAR 1. Enter the cost of qualified equipment placed in service in N.J. during the current year............. 1. 2. Enter 2% (.02) or 4% (.04) of line 1, whichever applies............................................................. 2. 3. Enter the lesser of line 2 or $1,000,000..................................................................................... 3. If you have prior years’ manufacturing equipment investments combined with increased employment, complete Parts II and/or III. Otherwise, go to Part IV. Part II Employment Investment Tax Credit Calculation for Investment in Qualified Equipment in New Jersey Made ONE YEAR PRIOR to the Current Tax Year 4. Average number of N.J. employees in the current year (Measurement Year)............................ 4. 5. Average number of N.J. employees in the tax year prior to the year that qualified equipment was placed in service in N.J. (Base Year).................................................................................. 5. 6. Subtract line 5 from line 4 (if zero or less, enter zero on line 10)............................................... 6. 7. Multiply line 6 by $1,000............................................................................................................. 7. 8. Enter the cost of qualified equipment placed in service in N.J. one year prior to the current tax year (from line 1, Form 305 of prior year)............................................................................. 8. 9. Enter 3% of line 8....................................................................................................................... 9. 10. Enter the lesser of line 7 or line 9............................................................................................... 10. Part III Employment Investment Tax Credit Calculation for Investment in Qualified Equipment in New Jersey Made TWO YEARS PRIOR to the Current Tax Year 11. Average number of N.J. employees in the prior tax year (Measurement Year).......................... 11. 12. Average number of N.J. employees in the tax year prior to the year that qualified equipment was placed in service in N.J. (Base Year).................................................................................. 12. 13. Subtract line 12 from line 11 (if zero or less, enter zero on line 17)........................................... 13. 14. Multiply line 13 by $1,000........................................................................................................... 14. 15. Enter the cost of qualified equipment placed in service in N.J. two years prior to the current tax year (from line 1, Form 305, 2 years prior) 15. 16. Enter 3% of line 15..................................................................................................................... 16. 17. Enter the lesser of line 14 or line 16........................................................................................... 17. Part IV Calculation of the Available Credit 18. Enter the total of the amounts on lines 3, 10, and 17................................................................. 18. 19. Manufacturing Equipment and Employment Investment Tax Credit carried over from prior year............................................................................................................................................ 19. 20. Total credit available. Add line 18 and line 19............................................................................ 20. Name as Shown on Return Part V Federal ID Number Unitary ID Number, if applicable NU Calculation of Allowable Credit Amount and Carryover (Combined return filers DO NOT complete Part V. Continue with Part VI.) 21. Enter tax liability from page 1, line 2a of CBT-100 or CBT-100S................................................. 21. 22. Enter the required minimum tax liability (see instructions)........................................................... 22. 23. Subtract line 22 from line 21......................................................................................................... 23. 24. Enter 50% of the tax liability reported on line 21.......................................................................... 24. 25. Enter the lesser of line 23 or line 24............................................................................................. 25. 26. Other tax credits used by taxpayer on current year’s return (see instructions): (a) (b) (c) (d) .............................. Total 26. 27. Subtract line 26 from line 25. If zero or less, enter zero............................................................... 27. 28. Allowable credit for the current tax period. Enter the lesser of line 20 or line 27 here and on Schedule A-3, Part I of the CBT-100 or CBT-100S...................................................................... 28. 29. Amount of credit carryover to following year’s return (subtract line 28 from line 20)................... 29. Name as Shown on Return Part VI Federal ID Number Unitary ID Number, if applicable NU Calculation of Allowable Credit Amount and Carryover – Combined Return Filers ONLY Section A – ALL Combined Return Filers 30. Enter the group tax liability from Schedule A, Section II, Part III, line 4a, column (c) of CBT-100U..................................................................................................................................... 30. 31. Enter the aggregate minimum tax of combined group members (see instructions)......................... 31. 32. Subtract line 31 from line 30......................................................................................................... 32. 33. Enter 50% of the tax liability reported on line 30.......................................................................... 33. 34. Enter the lesser of line 32 or line 33............................................................................................. 34. 35. Other tax credits used by combined group on current year’s return (see instructions): (a) (b) (c) (d) .............................. Total 35. 36. Subtract line 35 from line 34. If zero or less, enter zero............................................................... 36. 37. Allowable credit for the current tax period. Enter the lesser of line 20 or line 36. If sharing, also enter in the member’s column of Schedule A-3, Part I of the CBT-100U.............................. 37. If SHARING credit, complete line 38. If NOT sharing credit, skip line 38 and complete Section B. 38. Amount of credit carryover to following year’s return (subtract line 37 from line 20).................... 38. Section B – Combined Return Filers NOT Sharing Credit 39. a) Enter combined group tax liability from line 30........... 39a. b) Divide line 39a by the combined group allocation factor from Schedule J, line 9..................................... 39b. c) Member’s share of combined group tax liability – Multiply line 39b by member’s allocation factor from Schedule J, line 9.................................................................................................. 39c. 40. Required minimum tax liability...................................................................................................... 40. 41. Subtract line 40 from line 39c....................................................................................................... 41. 42. Enter 50% of the tax liability reported on line 39c........................................................................ 42. 43. Enter the lesser of line 41 or line 42............................................................................................. 43. 44. Other tax credits used by taxpayer on current year’s return (see instructions): (a) (b) (c) (d) .............................. Total 44. 45. Subtract line 44 from line 43. If zero or less, enter zero............................................................... 45. 46. Allowable credit for the current tax period. Enter the lesser of line 37 or line 45 here and in the member’s column of Schedule A-3, Part I of the CBT-100U........................................................ 46. 47. Amount of credit carryover to following year’s return (subtract line 46 from line 20)................... 47. 2,000 Instructions for Form 305 Manufacturing Equipment and Employment Investment Tax Credit Purpose a location outside the state to a location within the state of New Jersey, such equipment would be eligible for the credit. The purpose of the Manufacturing Equipment and Employment Investment Tax Credit is to encourage investment in certain manufacturing equipment in New Jersey and to provide the taxpayer with incentive to increase employment at New Jersey locations by employing New Jersey residents. For purposes of the credit, property shall be considered placed in service or use in New Jersey in the earlier of the following tax years: 1. The tax year in which, under the taxpayer’s depreciation practice, the period for depreciation with respect to such property begins. For transferred equipment, depreciation would continue that started when the property was originally placed in service outside the State. The equipment is not disqualified from the credit because depreciation did not start in New Jersey, or A taxpayer must invest in qualified manufacturing equipment in its tax year beginning on or after January 1, 1994, to qualify for this tax credit. Such investment has the benefit of allowing a tax credit computation for the tax year in which the investment was made as well as each of the following two tax years. The tax credit computation for the first year is based on the cost of the qualified manufacturing equipment placed in service in New Jersey during that tax year. This portion of the credit is calculated in Part I. The computations for the two following tax years are based on the average increase in New Jersey residents employed in New Jersey subject to a limitation based on the cost of the investment made in the first year. The portion of the tax credit for the two tax years following the year of investment are calculated in Parts II and III of this schedule. The credit allowable for any given year cannot exceed 50% of the tax liability otherwise due and cannot reduce the total tax liability below the statutory minimum. 2. The tax year in which the property is placed in a condition or state of readiness and availability for a specifically assigned function. Machinery, apparatus, or equipment is directly used in production only when used to initiate, sustain, or terminate the transformation of raw materials into finished products. Property leased or licensed by the lessee to another taxpayer is not qualified equipment. Nonqualifying Equipment Examples of qualified equipment may not include: Parts I, II, and III of this schedule relate to qualified investments made during three different tax years. Although it is possible after the initial investment year that more than one part can be completed, at no time should more than one part be completed with respect to the same investment. Refer to the example on page 2. 1. Motor vehicles or other off-premise transportation equipment; 2. Airplanes; 3. Property located or primarily used outside New Jersey; 4. Equipment or parts with a useful life of less than four years; Parts V and VI are used to calculate the allowable credit and carryover. Taxpayers filing Forms CBT-100 or CBT-100S complete Part V and CBT-100U filers complete Part VI. 5. Tangible personal property that the taxpayer contracts or agrees to lease or rent to another person or licenses another person to use; 6. Property or equipment purchased from related persons or affiliated entities (unless expressly waived by the Director, Division of Taxation); Taxpayers must include the appropriate credit form in the year the credit was earned even if they are not claiming the credit on their tax return. 7. Property acquired incident to the purchase of stock or assets of another entity that has already been used by that entity for manufacturing or processing in New Jersey; Manufacturing Equipment Tax Credit The Manufacturing Equipment portion is limited to 2% of the investment credit base of qualified equipment placed in service in the tax year, up to a maximum credit for the tax year of $1,000,000, provided however, with respect to qualified equipment placed in service during privilege periods beginning on and after July 1, 2004, if a taxpayer has 50 or fewer employees (an average number of full-time employees and full-time employee equivalents of 50 or less) and entire net income to be used a measure of the tax determined pursuant to section 6 of P.L. 1945, c.162 (C.54:10A-6) of less than $5,000,000 for the tax year, the taxpayer shall be allowed a credit in an amount equal to 4% of the investment credit base of qualified equipment placed in service in the tax year, up to a maximum allowed credit for the tax year of $1,000,000. 8. Equipment for which either a New Jobs Investment Tax Credit or a Research and Development Tax Credit has been claimed; 9. Any tangible personal property placed in service prior to the start of the tax year commencing in Calendar Year 1994; 10. Property not directly attributable to manufacturing, processing, or refining. 11. Property not directly attributable to the generation of electricity or thermal energy. Investment Credit Base (Net Cost of Qualified Equipment) Qualified Equipment Net Cost is the net monetary consideration provided for acquisition of title and/or ownership to the subject property. The cost of qualified equipment shall not include the value of equipment given in trade or exchange for the equipment purchased for business relocation or expansion. Qualified equipment means machinery, apparatus, or equipment acquired by purchase or lease for use or consumption by the taxpayer directly and primarily in the production of tangible personal property by manufacturing, processing, assembling, or refining, as defined in N.J.S.A. 54:32B-8.13(a), having a useful life of four or more years, and placed in service in New Jersey and machinery, apparatus, or equipment acquired by purchase for use or consumption directly and primarily in the generation of electricity as defined pursuant to subsection b. of section 25 of P.L. 1980, c.105 (C.54:32B-8.13) to the point of connection to the grid, or in the generation of thermal energy, having a useful life of four or more years, placed in service in this State. If equipment is damaged or destroyed by fire, flood, storm, or other casualty, or is stolen, the cost of replacement equipment shall not include any insurance proceeds received in compensation for the loss. In the case of self-constructed equipment, the cost shall be the amount properly charged to the capital account for depreciation in accordance with federal income tax law. Qualified equipment also includes property that a company may transfer from an out-of-State facility to a location within New Jersey. If a corporation moves equipment that otherwise would qualify for the credit from The cost of leased equipment to the lessee is the minimum amount required by the lease agreement to be paid over the term of the lease, -1- Employees and Employee Equivalents excluding amounts to be paid after the expiration of the useful life of the equipment. Lease renewals, subleases, or assignments shall not be considered. Full-time employee means a New Jersey domiciled resident working for the taxpayer for at least 140 hours per month at a wage not less than the State or federal minimum wage. In calculating the average, part-time employee hours may be aggregated to determine full-time equivalents (140 hours equals one full-time employee equivalent) provided the parttime employee has worked for the taxpayer for at least 20 hours per week for at least six months during the tax year, as defined in N.J.S.A. 54:10A-5.17. Employment Investment Tax Credit The Employment Investment portion is valid for each of the two tax years next succeeding the tax year for which the Manufacturing Equipment Credit is allowed, but is limited to 3% of the investment credit base, not to exceed a maximum allowed amount for each of the two tax years of $1,000 multiplied by the increase in the average number of qualified employees. The calculations in Parts II and III of Form 305 are based on the increase in the average number of full-time employees and employee equivalents residing and domiciled in New Jersey employed at work locations in New Jersey from the employment base year to the employment measurement year. Example: 2020 2021 2022 2023 •• Average of 125 employees and equivalents •• Average of 140 employees and equivalents •• Average of 150 employees and equivalents •• Average of 160 employees and equivalents •• Not an eligible year for credit •• Investment of $3,000,000 •• Investment of $2,000,000 •• No new investment •• Complete Part I for $3,000,000 investment made in 2021 •• Complete Part I for $2,000,000 investment made in 2022 •• Part I not applicable •• Part II not applicable •• Complete Part II for increase in employment due to 2021 investment •• Part III not applicable •• Average employee increase of 25 pertaining to 2021 investment* •• Part III not applicable •• Complete Part II for increase in employment due to 2022 investment •• Average employee increase of 20 pertaining to 2022 investment** •• Complete Part III for increase in employment due to 2021 investment •• Average employee increase of 25 pertaining to 2021 investment* * For 2022 Part II and 2023 Part III the Base Year is 2020 (the year preceding the 2021 investment) and the Measurement Year is 2022 (the year following the 2021 investment). ** For 2023 Part II the Base Year is 2021 (the year preceding the 2022 investment). Base Year is the tax year immediately preceding the year in which the qualified investment was made. 5. The amount of credit taken; and 6. The date it was disposed of or otherwise ceased to be qualified equipment. Measurement Year is the tax year immediately following the year in which the qualified investment was made. Credit Recapture Credit attributable to property that is disposed of or ceases to be qualified equipment prior to the end of its categorized useful life shall be calculated based on the following ratios: Credit Carryover The amount of credit that cannot be applied for the tax year due to the applicable limitations may be carried over to the seven tax years following a credit’s tax year. Note, however, that a taxpayer may not carry over any amount of unused credit to a tax year during which a corporate acquisition, with respect to which a taxpayer was a target corporation, occurred or during which the taxpayer was a party to a merger or a consolidation. 3-YEAR PROPERTY ALL OTHER PROPERTY Number of months of qualified use Number of months of qualified use 36 60 Additionally, except when the property is damaged or destroyed by fire, flood, storm, or other casualty, or is stolen, the taxpayer shall redetermine the amount of credit allowed for the tax year of the credit by reducing the investment credit base by the cost of the amount of the disposed or disqualified equipment. If the redetermination of the credit results in an increase in tax liability for any period in which the credit was applied, then the amount of unpaid liability shall be considered a deficiency. The taxpayer would then be required to file an amended return. Record Keeping A taxpayer that claims credit under this Act shall maintain sufficient records to establish the following facts for each item of qualified equipment: 1. Its identity; 2. Its actual or reasonably determined cost; 3. Its useful depreciation life; 4. The month and tax year in which it was placed in service; -2- Specific Instructions for Form 305 must complete Part VI instead. The amount of the credits applied cannot exceed 50% of the tax liability otherwise due and cannot reduce the tax liability to an amount less than the statutory minimum. Combined Return Filers If filing a combined return, this form must be completed by the member that earned the credit. All combined return filers must check the combined return filers box at the top of the form and complete Part VI, Section A. Line 22 – The minimum tax is assessed based on the New Jersey Gross Receipts as follows: New Jersey Gross Receipts Less than $100,000 Members Opting Not to Share. In general, tax credits are earned by a member of the combined group and are shareable with the combined group. However, members are not required to share their credits. See N.J.S.A. 54:10A-4.6.i and TB-90(R), Tax Credits and Combined Returns. In addition to Section A, members that choose not to share must also complete Part VI, Section B and fill in the oval at the top of the form to indicate they are not sharing the credit. $100,000 or more but less than $250,000 CBT-100 CBT-100S $ 500 $ 375 750 562 $250,000 or more but less than $500,000 1,000 750 $500,000 or more but less than $1,000,000 1,500 1,000 $1,000,000 or more 2,000 1,500 Calculation of Credit If a taxpayer is filing a separate return and is a member of an affiliated or controlled group that has a total payroll of $5,000,000 or more for the return period, the minimum tax is $2,000. Tax periods of less than 12 months are subject to the higher minimum tax if the prorated total payroll exceeds $416,667 per month. The tax credit computed in this section applies to purchases of qualified manufacturing equipment made during the current tax year. Line 26 – Taxpayers claiming multiple credits must list any credits already applied to the tax liability to ensure accuracy of the calculation for maximum credit allowable. Part I – Credit Calculation for Investment in Qualified Equipment in New Jersey in the Current Year Line 2 – Refer to the Manufacturing Equipment Tax Credit instruction on page 1 for information regarding the use of 2% or 4%. Part VI – Calculation of the Allowable Credit Amount and Carryover for Combined Return Filers Part II – Employment Investment Tax Credit Calculation for Investment in Qualified Equipment in New Jersey Made 1 Year Prior to the Current Tax Year For CBT-100U filers, the total and allowable Manufacturing Equipment and Employment Investment Tax Credit for the current year is calculated in Part VI. All combined return filers must complete Section A. Members that choose not to share their credit must also complete section B. The tax credit computed in this section is based on the average increase in New Jersey residents employed by the taxpayer at New Jersey locations subject to a limitation of 3% of the cost of the qualified manufacturing equipment purchased in the prior tax year. Section A – To be completed by ALL combined return filers This section calculates the amount of credit allowable for the group. If a member chooses not to share their credit with the group, Section A must still be completed to ensure the credit allowed for the member does not exceed the amount that would otherwise be allowed against the group tax liability. Line 4 – Enter the average number of full-time New Jersey residents employed in the current year. Line 5 – Enter the average number of full-time New Jersey residents employed in the tax year prior to the year that qualified equipment was placed in service in New Jersey (two years prior to the current tax year). The amount of the credit calculated in this section cannot exceed 50% of the group tax liability otherwise due and cannot reduce the tax liability to an amount less than the aggregate statutory minimum tax of the group members. Part III – Employment Investment Tax Credit Calculation for Investment in Qualified Equipment in New Jersey Made 2 Years Prior to the Current Tax Year. Line 31 – Multiply the number of taxable group members by $2,000 and enter the result. Line 35 – Combined groups claiming multiple credits must list any credits already applied to the group tax liability to ensure accuracy of the calculation for maximum credit allowable. The tax credit computed in this section is based on the average increase in New Jersey residents employed by the taxpayer at New Jersey locations subject to a limitation of 3% of the cost of the qualified manufacturing equipment purchased two years prior to the current tax year. Section B This section is used to calculate the amount of credit allowable for members that choose not to share their credit with the group. Section B is completed based on the member’s share of the group tax liability. The amount of the credit calculated in this section cannot exceed 50% of the member’s tax liability otherwise due and cannot reduce the tax liability to an amount less than $2,000. The amount of the credit is also limited to the amount that would otherwise be allowed against the group tax liability if the member had been sharing the credit. Line 11 – Enter the average number of full-time New Jersey residents employed in the prior tax year. Line 12 – Enter the average number of full-time New Jersey residents employed in the tax year prior to the year that qualified equipment was placed in service in New Jersey (three years prior to the current tax year). Line 13 – Subtract line 12 from line 11 (if zero or less, enter zero on line 17). The number of employees on line 13 should be equal to the number of employees reported on line 6, Part II of the prior year. Line 44 – Members claiming multiple credits must list any credits already applied to the member’s tax liability to ensure accuracy of the calculation for maximum credit allowable. Part V – Calculation of the Allowable Credit Amount and Carryover (for CBT-100 and CBT-100S Filers only) For CBT-100 and CBT-100S filers, the allowable Manufacturing Equipment and Employment Investment Tax Credit for the current year is calculated in Part V. Combined return filers do not complete Part V, and -3-
Extracted from PDF file 2023-new-jersey-form-305.pdf, last modified October 2023

More about the New Jersey Form 305 Corporate Income Tax Tax Credit TY 2023

We last updated the Manufacturing Equipment and Employment Investment Tax Credit and Instructions in February 2024, so this is the latest version of Form 305, fully updated for tax year 2023. You can download or print current or past-year PDFs of Form 305 directly from TaxFormFinder. You can print other New Jersey tax forms here.


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Other New Jersey Corporate Income Tax Forms:

TaxFormFinder has an additional 95 New Jersey income tax forms that you may need, plus all federal income tax forms.

Form Code Form Name
Form CBT-160-A Underpayment of Estimated NJ Corporation Business Tax For Taxpayers with Gross Receipts less than $50,000,000
Form CBT-200-T Corporation Business Tax Tentative Return and Application
Form DCC-1 Document Control Center Request Form
Form NJ-1041 Fiduciary Return Form
Form A-3128 Claim for Refund of Estimated Gross Income Tax Payment.

Download all NJ tax forms View all 96 New Jersey Income Tax Forms


Form Sources:

New Jersey usually releases forms for the current tax year between January and April. We last updated New Jersey Form 305 from the Division of Revenue in February 2024.

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Form 305 is a New Jersey Corporate Income Tax form. States often have dozens of even hundreds of various tax credits, which, unlike deductions, provide a dollar-for-dollar reduction of tax liability. Some common tax credits apply to many taxpayers, while others only apply to extremely specific situations. In most cases, you will have to provide evidence to show that you are eligible for the tax credit, and calculate the amount of the credit to which you are entitled.

About the Corporate Income Tax

The IRS and most states require corporations to file an income tax return, with the exact filing requirements depending on the type of company.

Sole proprietorships or disregarded entities like LLCs are filed on Schedule C (or the state equivalent) of the owner's personal income tax return, flow-through entities like S Corporations or Partnerships are generally required to file an informational return equivilent to the IRS Form 1120S or Form 1065, and full corporations must file the equivalent of federal Form 1120 (and, unlike flow-through corporations, are often subject to a corporate tax liability).

Additional forms are available for a wide variety of specific entities and transactions including fiduciaries, nonprofits, and companies involved in other specific types of business.

Historical Past-Year Versions of New Jersey Form 305

We have a total of thirteen past-year versions of Form 305 in the TaxFormFinder archives, including for the previous tax year. Download past year versions of this tax form as PDFs here:


2023 Form 305

Form 305 Manufacturing Equipment and Employment Tax Credit

2022 Form 305

Form 305 Manufacturing Equipment and Employment Tax Credit

2021 Form 305

2021 Manufacturing Equipment and Employment Investment Tax Credit

2020 Form 305

Form 305 Manufacturing Equipment and Employment

2018 Form 305

Form 305 - Manufacturing Equipment and Employment Investment Tax Credit and Instructions 2018

2017 Form 305

Form 305 - Manufacturing Equipment and Employment Investment Tax Credit and Instructions

2016 Form 305

Form 305 - Manufacturing Equipment and Employment Investment Tax Credit and Instructions

Form 305 - Manufacturing Equipment and Employment Investment Tax Credit and Instructions 2015 Form 305

Form 305 - Manufacturing Equipment and Employment Investment Tax Credit and Instructions

Form 305 - Manufacturing Equipment and Employment Investment Tax Credit and Instructions 2014 Form 305

Form 305 - Manufacturing Equipment and Employment Investment Tax Credit and Instructions

PDF Form Pack generated by formuPack 2012 Form 305

PDF Form Pack

2011 Form 305

305-2011.qxp


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