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New Jersey Corporation Business Tax
FORM 305
Manufacturing Equipment and Employment
2023
Investment Tax Credit
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.

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Name as Shown on Return  Federal ID Number                                           Unitary ID Number, if applicable
                                                                                     NU
Part V 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.

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Name as Shown on Return Federal ID Number Unitary ID Number, if applicable
NU
Part VI 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. 2,000
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.

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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,
The purpose of the Manufacturing Equipment and Employment Invest- such equipment would be eligible for the credit.
ment Tax Credit is to encourage investment in certain manufacturing
equipment in New Jersey and to provide the taxpayer with incentive to For purposes of the credit, property shall be considered placed in ser-
increase employment at New Jersey locations by employing New Jer- vice or use in New Jersey in the earlier of the following tax years:
sey residents. 1. The tax year in which, under the taxpayer’s depreciation practice,
the period for depreciation with respect to such property begins.
A taxpayer must invest in qualified manufacturing equipment in its tax For transferred equipment, depreciation would continue that started
year beginning on or after January 1, 1994, to qualify for this tax credit. when the property was originally placed in service outside the State.
Such investment has the benefit of allowing a tax credit computation for The equipment is not disqualified from the credit because deprecia-
the tax year in which the investment was made as well as each of the tion did not start in New Jersey, or
following two tax years. The tax credit computation for the first year is
based on the cost of the qualified manufacturing equipment placed in 2. The tax year in which the property is placed in a condition or state of
service in New Jersey during that tax year. This portion of the credit is readiness and availability for a specifically assigned function.
calculated in Part I. The computations for the two following tax years are
based on the average increase in New Jersey residents employed in Machinery, apparatus, or equipment is directly used in production only
New Jersey subject to a limitation based on the cost of the investment when used to initiate, sustain, or terminate the transformation of raw ma-
made in the first year. The portion of the tax credit for the two tax years terials into finished products. Property leased or licensed by the lessee
following the year of investment are calculated in Parts II and III of this to another taxpayer is not qualified equipment.
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.
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 1. Motor vehicles or other off-premise transportation equipment;
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 in- 2. Airplanes;
vestment. Refer to the example on page 2. 3. Property located or primarily used outside New Jersey;
Parts V and VI are used to calculate the allowable credit and carry- 4. Equipment or parts with a useful life of less than four years;
over. Taxpayers filing Forms CBT-100 or CBT-100S complete Part V and 5. Tangible personal property that the taxpayer contracts or agrees to
CBT-100U filers complete Part VI. lease or rent to another person or licenses another person to use;
Taxpayers must include the appropriate credit form in 6. Property or equipment purchased from related persons or affili-
the year the credit was earned even if they are not ated entities (unless expressly waived by the Director, Division of
claiming the credit on their tax return. Taxation);
7. Property acquired incident to the purchase of stock or assets of an-
other entity that has already been used by that entity for manufactur-
Manufacturing Equipment Tax Credit ing or processing in New Jersey;
The Manufacturing Equipment portion is limited to 2% of the invest- 8. Equipment for which either a New Jobs Investment Tax Credit or a
ment credit base of qualified equipment placed in service in the tax Research and Development Tax Credit has been claimed;
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 9. Any tangible personal property placed in service prior to the start of
privilege periods beginning on and after July 1, 2004, if a taxpayer has the tax year commencing in Calendar Year 1994;
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 10. Property not directly attributable to manufacturing, processing, or
be used a measure of the tax determined pursuant to section 6 of P.L. refining.
1945, c.162 (C.54:10A-6) of less than $5,000,000 for the tax year, the 11. Property not directly attributable to the generation of electricity or
taxpayer shall be allowed a credit in an amount equal to 4% of the in- thermal energy.
vestment 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.
Investment Credit Base
Qualified Equipment (Net Cost of Qualified Equipment)
Qualified equipment means machinery, apparatus, or equipment ac- Net Cost is the net monetary consideration provided for acquisition
quired by purchase or lease for use or consumption by the taxpayer of title and/or ownership to the subject property. The cost of qualified
directly and primarily in the production of tangible personal property equipment shall not include the value of equipment given in trade
by manufacturing, processing, assembling, or refining, as defined in or exchange for the equipment purchased for business relocation or
N.J.S.A. 54:32B-8.13(a), having a useful life of four or more years, and expansion.
placed in service in New Jersey and machinery, apparatus, or equip-
ment acquired by purchase for use or consumption directly and primarily If equipment is damaged or destroyed by fire, flood, storm, or other ca-
in the generation of electricity as defined pursuant to subsection b. of sualty, or is stolen, the cost of replacement equipment shall not include
section 25 of P.L. 1980, c.105 (C.54:32B-8.13) to the point of connection any insurance proceeds received in compensation for the loss. In the
to the grid, or in the generation of thermal energy, having a useful life of case of self-constructed equipment, the cost shall be the amount prop-
four or more years, placed in service in this State. erly 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 corpo- The cost of leased equipment to the lessee is the minimum amount
ration moves equipment that otherwise would qualify for the credit from required by the lease agreement to be paid over the term of the lease,
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excluding amounts to be paid after the expiration of the useful life of           Employees and Employee Equivalents
the  equipment. Lease renewals, subleases, or  assignments shall not              Full-time employee means a New Jersey domiciled resident working 
be considered.                                                                    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 
Employment Investment Tax Credit                                                  (140 hours equals one full-time employee equivalent) provided the part-
The Employment Investment portion is valid for each of the two tax                time employee has worked for the taxpayer for at least 20 hours per 
years next succeeding the tax year for which the Manufacturing Equip-             week for at least six months during the tax year, as defined in N.J.S.A. 
ment Credit is allowed, but is limited to 3% of the investment credit base,       54:10A-5.17.
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           The calculations in Parts II and III of Form 305 are based on the increase 
employees.                                                                        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 mea-
                                                                                  surement year.

Example:
                 2020                          2021                                          2022                               2023
•  Average of 125 employees and    •  Average of 140 employees and           •  Average of 150 employees and   •  Average of 160 employees and 
    equivalents                         equivalents                               equivalents                       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         •  Complete Part I for $2,000,000 •  Part I not applicable
                                        investment made in 2021                   investment made in 2022
                                                                                                               •  Complete Part II for increase 
                                   •  Part II not applicable                 •  Complete Part II for increase       in employment due to 2022 
                                                                                  in employment due to 2021         investment
                                   •  Part III not applicable                     investment
                                                                                                               •  Average employee increase 
                                                                             •  Average employee increase           of 20 pertaining to 2022 
                                                                                  of 25 pertaining to 2021          investment**
                                                                                  investment*
                                                                                                               •  Complete Part III for increase 
                                                                             •  Part III not applicable             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             5. The amount of credit taken; and
qualified investment was made.
                                                                                  6. The  date  it  was  disposed  of  or  otherwise  ceased  to  be  qualified 
Measurement Year is the tax year   immediately following the year in                 equipment.
which the qualified investment was made.
                                                                                  Credit Recapture
                                                                                  Credit attributable to property that is disposed of or ceases to be qual-
Credit Carryover                                                                  ified equipment prior to the end of its categorized useful life shall be 
The amount of credit that cannot be applied for the tax year due to the           calculated based on the following ratios:
applicable limitations may be carried over to the seven tax years fol-
lowing 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                3-YEAR PROPERTY                     ALL OTHER PROPERTY
acquisition, with respect to which a taxpayer was a target corporation,           Number of months of qualified use Number of months of qualified use
occurred or during  which the taxpayer was a party to a merger or a                             36                              60
consolidation. 
                                                                                  Additionally, except when the property is damaged or destroyed by fire, 
                                                                                  flood, storm, or other casualty, or is stolen, the taxpayer shall redeter-
Record Keeping                                                                    mine the amount of credit allowed for the tax year of the credit by reduc-
A taxpayer that claims credit under this Act shall maintain sufficient re-        ing the investment credit base by the cost of the amount of the disposed 
cords to establish the following facts for each item of qualified equipment:      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, 
1. Its identity;                                                                  then the amount of unpaid liability shall be considered a deficiency. The 
2. Its actual or reasonably determined cost;                                      taxpayer would then be required to file an amended return.
3. Its useful depreciation life;
4. The month and tax year in which it was placed in service;

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                                                                                  must complete Part VI instead. The amount of the credits applied cannot 
Specific Instructions for Form 305                                                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        Line 22 –     The minimum  tax is assessed based on the New Jersey 
member  that  earned  the  credit.  All  combined  return  filers  must           Gross Receipts as follows: 
check the combined return filers box at the top of the form and complete 
Part VI, Section A.                                                               New Jersey Gross Receipts                 CBT-100       CBT-100S
Members Opting Not to Share.    In general, tax credits are earned by             Less than $100,000                        $   500        $   375
a member of the combined group and are shareable with the combined                $100,000 or more but less than $250,000             750            562
group. However, members are not required to share their credits. See              $250,000 or more but less than $500,000   1,000                    750
N.J.S.A.  54:10A-4.6.i and  TB-90(R), Tax Credits and Combined  Re-
turns. In addition to Section A, members that choose not to share must            $500,000 or more but less than $1,000,000 1,500          1,000
also complete Part VI, Section B and fill in the oval at the top of the form      $1,000,000 or more                        2,000          1,500
to indicate they are not sharing the 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 
Calculation of Credit                                                             return period, the minimum tax is $2,000. Tax periods of less than 12 
Part I – Credit Calculation for Investment in Qualified                           months are subject to the higher minimum tax if the prorated total payroll 
                                                                                  exceeds $416,667 per month.
Equipment in New Jersey in the Current Year
The tax credit computed in this section applies to purchases of qualified         Line 26 –     Taxpayers claiming multiple credits must list any credits al-
manufacturing equipment made during the current tax year.                         ready applied to the tax liability to ensure accuracy of the calculation for 
                                                                                  maximum credit allowable.
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 
                                                                                  For CBT-100U filers, the total and allowable Manufacturing Equipment 
Calculation for Investment in Qualified Equipment in                              and Employment Investment Tax Credit for the current year is calculated 
New Jersey Made 1 Year Prior to the Current Tax Year                              in Part VI. All combined return filers must complete Section A. Members 
The tax credit computed in this section is based on the average increase          that choose not to share their credit must also complete section B.
in New Jersey residents employed by the taxpayer at New Jersey loca-
tions subject to a limitation of 3% of the cost of the qualified manufactur-      Section A – To be completed by ALL combined return filers
ing equipment purchased in the prior tax year.                                    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 
Line 4 – Enter the average number of full-time New Jersey residents               still be completed to ensure the credit allowed for the member does not 
employed in the current year.                                                     exceed the amount that would otherwise be allowed against the group 
                                                                                  tax liability.
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           The amount of the credit calculated in this section cannot exceed 50% of 
placed in service in New Jersey (two years prior to the current tax year).        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 
Part III – Employment Investment Tax Credit                                       members.
Calculation for Investment in Qualified Equipment 
                                                                                  Line 31 – Multiply the number of taxable group members by $2,000 and 
in New Jersey Made 2 Years Prior to the Current Tax                               enter the result.
Year.
                                                                                  Line 35 – Combined groups claiming multiple credits must list any cred-
The tax credit computed in this section is based on the average increase          its already applied to the group tax liability to ensure accuracy of the 
in New Jersey residents employed by the taxpayer at New Jersey loca-              calculation for maximum credit allowable.
tions subject to a limitation of 3% of the cost of the qualified manufactur-
ing equipment purchased two years prior to the current tax year.                  Section B
Line 11 – Enter the average number of full-time New Jersey residents              This section is used to calculate the amount of credit allowable for mem-
employed in the prior tax year.                                                   bers 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 
Line 12 – Enter the average number of full-time New Jersey residents              amount of the credit calculated in this section cannot exceed 50% of the 
employed in the tax year prior to the year that qualified equipment was           member’s tax liability otherwise due and cannot reduce the tax liability 
placed in service in New Jersey (three years prior to  the current tax            to an amount less than $2,000. The amount of the credit is also limited 
year).                                                                            to the amount that would otherwise be allowed against the group tax 
                                                                                  liability if the member had been sharing the credit.
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               Line 44 –     Members claiming multiple credits must list any credits al-
number of employees reported on line 6, Part II of the prior year.                ready 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 Equip-
ment and Employment Investment Tax Credit for the current year is cal-
culated in Part V. Combined return filers do not complete Part V, and 
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