NJ Law Provides Tax Incentives for Concrete Products that Use Carbon Footprint-Reducing Technology
On November 8, 2021, New Jersey Gov. Phil Murphy signed legislation that requires builders to offer concrete products that use carbon footprint-reducing technology and provides corporate business tax, personal income tax, and sales tax incentives for using that technology, effective January 1, 2022.
The phrase “concrete products that use carbon footprint-reducing technology” means a unit concrete product that is certified by the Department of Environmental Protection (DEP) or any independent third party authorized by the DEP generating at least 50 percent less carbon dioxide emission in the production and use of the unit concrete product than conventional unit concrete products made with ordinary cement. The unit concrete product may not include ready-mix concrete, sand, stone gravel, or bituminous concrete or asphalt. Receipts for the purchases of the unit concrete products must be attached to the tax returns to obtain the credits.
New Jersey will offer several different incentives for businesses that use the carbon footprint-reducing technology, including:
- A sales and use tax exemption toward receipts from the sale of unit concrete products that use carbon footprint-reducing technology, which may include permeable pavement, used in the construction or improvement of any resident or commercial buildings.
- A nonrefundable credit against both the corporation business tax and the gross income tax in an amount equal to $2 per square foot for the purchase of unit concrete products that use carbon footprint-reducing technology, which may include permanent pavement used in construction or improvement of any residential or commercial building or in the replacement of an impervious surface with permeable pavement. This credit is allowed in the tax year in which the purchase is made. The value of the credits allowed to the taxpayer may not exceed $3,000 for residential property and $30,000 for commercial property in a single tax year. Credits may be carried forward seven tax years for both the corporation business tax and the gross income tax. There is a ceiling of $20 million in annual credit grants.
If the entity claiming the credit is a partnership or S corporation, the credit will be allocated in respect of the distributive share of the partnership income. It does not appear the credit may be taken at the entity level.
Be sure to reach out to your BKD Trusted Advisor™ or submit the Contact Us form below if you have questions about how these incentives may affect you.