305: Manufacturing Equipment and Employment Investment Tax Credit (2025)

New Jersey · NJ Division of Taxation · Used for tax years 2025

New Jersey Form 305 calculates the Manufacturing Equipment and Employment Investment Tax Credit for Corporation Business Tax. It reports qualified equipment investments, employment increases tied to prior-year investments, and the credit allowed for the current year or carried fo

Who files this form

Form 305 is for Corporation Business Tax taxpayers claiming the Manufacturing Equipment and Employment Investment Tax Credit for qualified equipment placed in service in New Jersey and related increases in qualifying New Jersey employment.

  • Include a completed Form 305 with your CBT-100, CBT-100S, or CBT-100U return to validate the claim.
  • You must include the credit form for the year the credit was earned, even if you are not claiming the credit on that year's return.
  • For a combined return, the member that earned the credit must complete the form.

What you'll need

Keep records establishing these facts for each item of qualified equipment:

  • Its identity and actual or reasonably determined cost.
  • Its useful depreciation life.
  • The month and tax year it was placed in service.
  • The amount of credit taken.
  • The date it was disposed of or otherwise stopped qualifying.

To complete the applicable calculations, have your prior Forms 305, credit carryforward amounts, qualifying employee averages for the base and measurement years, and information about other tax credits already applied to your tax liability.

You will also need figures from your CBT-100, CBT-100S, or CBT-100U return. Combined return members that do not share their credit use the group and member allocation factors from Schedule J, line 9.

How to file

Include the completed Form 305 with your CBT-100, CBT-100S, or CBT-100U return. The supplied text does not give a mailing address or e-filing instructions.

  1. Complete Part I for qualified equipment placed in service in New Jersey during the current year. Complete Parts II and/or III for qualifying employment credits related to investments made one or two tax years earlier.
  2. Complete Part IV to total the available credit, including any credit carried forward.
  3. If filing CBT-100 or CBT-100S, complete Part V. Enter the allowable credit from line 28 on Schedule A-3, Part I of the return.
  4. If filing CBT-100U, skip Part V and complete Part VI, Section A. Check the combined return filers box. If sharing the credit, enter line 37 in the member's column of Schedule A-3, Part I.
  5. If a combined return member is not sharing the credit, also fill in the nonsharing oval and complete Part VI, Section B. Enter line 46 in the member's column of Schedule A-3, Part I of CBT-100U.

Common mistakes

  • Leaving out the form when the credit is earned but not claimed. The credit form is still required for that year.
  • Using the same investment in more than one of Parts I, II, and III. These parts cover investments from different tax years. Do not complete more than one part for the same investment.
  • Using Part V for a combined return. Combined return filers must use Part VI. Members not sharing their credit must complete both Sections A and B.
  • Omitting other credits already applied. List them on line 26, 35, or 44, as applicable, so the allowable credit is calculated correctly.
  • Applying the credit against the Corporate Transit Fee. The instructions prohibit this.
  • Carrying unused credit into a prohibited year. Unused credit cannot be carried into a tax year in which the taxpayer was the target of a corporate acquisition or was a party to a merger or consolidation.

Questions people ask

How much is the equipment investment credit?

The credit is generally 2% of the investment credit base, up to $1,000,000 for the tax year. The rate is 4% if the taxpayer has an average of 50 or fewer full-time employees and full-time employee equivalents and entire net income used to measure the tax of less than $5,000,000. The same $1,000,000 maximum applies.

How does the employment investment credit work?

It is available for each of the two tax years after the equipment investment year. For each year, it is limited to the lesser of 3% of the investment credit base or $1,000 multiplied by the increase in the average number of qualified employees. The base year is the year immediately before the investment, and the measurement year is the year immediately after it.

Can equipment moved into New Jersey qualify?

Yes. Equipment transferred from an out-of-state facility to New Jersey can qualify if it otherwise meets the requirements. It is not disqualified merely because depreciation began outside New Jersey.

Can I use all of the available credit immediately?

Not necessarily. The allowable credit cannot exceed 50% of the tax liability otherwise due or reduce liability below the applicable statutory minimum. Other credits already applied also affect the calculation.

Can unused credit be carried forward?

Credit unused because of the applicable limitations may be carried forward to the seven tax years following the credit's tax year. It cannot be carried into a year in which the taxpayer was the target of a corporate acquisition or was a party to a merger or consolidation.

Official sources

All versions of 305