The New Jersey Housing and Mortgage Finance Agency (NJHMFA) will be auctioning up to $500 million in New Jersey State tax credits beginning April 15 at 9 a.m. ET. A maximum of $100 million in State tax credits will be awarded each year. The minimum bid price per tax credit is $0.80 on the dollar.
State tax credits are dollar-for-dollar reductions in State tax liabilities, creating tax benefits for the owner of the tax credit. They are not to be confused with the federal Low Income Housing Tax Credit (LIHTC).
Who Can Participate?
New Jersey businesses with liabilities pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), sections 2 and 3 of P.L.1945, c.132 (C.54:18A-2 and C.54:18A-3), section 1 of P.L.1950, c.231 (C.17:32-15), or N.J.S.17B:23-5, colloquially referred to as the Corporate Business Tax or Insurance Premium Taxes, are eligible to participate in the auction to purchase New Jersey State tax credits. Credits may only be applied to the aforementioned State tax liability.
Tax Credit Subsidy Program Auction
Awarded State tax credits can be applied to the Corporate Business Tax or Insurance Premium Tax in the tax privilege period as of the date of NJHMFA’s approval. Any unused credit can be carried forward for use in the next seven tax periods, according to a NJHMFA press release.
All qualifying New Jersey businesses are encouraged to participate in this exciting tax-savings opportunity, which allows New Jersey taxpayers to realize direct, dollar-for-dollar tax reductions while supporting critical investment in the Garden State.
Proceeds from each annual auction will be invested in the production of affordable and workforce housing.
Frequently Asked Questions
What is needed to submit a bid? All bidders must possess and submit a valid Tax Clearance Certificate from the New Jersey Division of Taxation for the bidder organization and all related entities. To obtain a Tax Clearance Certificate, please email BusinessAssistanceTC.Taxation@treas.nj.gov or call (609) 322-6835.
What are the bid requirements? The minimum bid that will be considered is $250,000 in tax credit authorization. The maximum bid is $100 million in tax credit authorization. All bids must be at least $0.80 per tax credit. For example, a bid seeking $1,000,000 in tax credits at face value, $0.95 per tax credit, totals $950,000.
How long after the auction closes will bidders hear back? NJHMFA and the New Jersey Division of Taxation will evaluate all bids promptly after the close of the auction period. Timeline for review will vary depending on the number of bids received and bidders’ individual circumstances.
How does my purchase of tax credits support the affordable and workforce housing projects that are financed by it? The auction to fund the affordable and workforce housing programs and the programs themselves are two separate processes. Unlike LIHTC, there is no connection between the purchase of tax credits and the end projects.
When can winning bidders expect to receive New Jersey State tax credits? NJHMFA will release the tax credit certificate to a successful bidder upon receipt of a fully executed tax credit purchase agreement and receipt by NJHMFA of the full bid amount.
To learn more about this new State tax credit auction, including eligibility details, auction processes, timing, and email updates, click here. Email questions to: auction@njhmfa.gov. To see a sample tax credit purchase agreement, click here.