306: Research and Development Tax Credit (2024)
New Jersey · NJ Division of Taxation · Used for tax years 2024
Form 306 calculates the 2024 New Jersey Corporation Business Tax Research and Development Tax Credit. It reports research expenses and payments, credits carried forward or received from partnerships, and the credit allowed for the current tax period.
Who files this form
Corporations claiming the New Jersey Research and Development Tax Credit use Form 306 and submit it with their Corporation Business Tax return. The credit covers qualifying research activities performed in New Jersey.
- Include the credit form for the year the credit was earned, even if you are not claiming the credit on that year's return.
- A New Jersey S corporation may claim the credit against its New Jersey Corporation Business Tax liability. It cannot pass the credit through to shareholders.
- Partnerships complete the applicable calculation parts to report the credit to corporate partners. The partnership cannot use the credit itself.
- Corporate partners complete Form 306 to claim their share of a partnership's credit.
- For a combined return, the member that earned or purchased the credit must complete a separate Form 306.
What you'll need
Have these documents and calculation details ready, as applicable:
- Federal Form 6765 as filed with the IRS. Attach a copy. Cannabis licensees should follow the special directions in Part II, question 3, and include a detailed attachment explaining their calculations.
- Research expense details: qualified wages, supplies, computer rental or lease costs, contract research expenses, basic research payments, and amounts paid or incurred to energy consortia in New Jersey.
- Prior-year figures required by your method: the regular method uses a fixed-base percentage and average annual gross receipts for the four preceding tax years. The alternative simplified method asks for qualified research expenses for the prior three periods.
- Prior credit carryforward amounts and information about other credits already applied to your tax liability.
- Schedule NJK-1, if claiming a partnership credit. Attach the NJK-1 stating your share of the credit to your Corporation Business Tax return.
- A transfer certificate, if claiming credits purchased through the Economic Development Authority's Technology Business Tax Certificate Transfer Program. Attach a copy to Form 306.
How to file
Include the completed Form 306 with your CBT-100, CBT-100S, or CBT-100U return to validate the claim. The supplied text does not give a mailing address or e-file directions.
- Complete Parts I and II as applicable. Use Part III for the regular credit method or Part IV for the alternative simplified credit method. Generally, you must use the same method used for your federal credit.
- Complete Part V to calculate the total credit available.
- CBT-100 and CBT-100S filers complete Part VI and report the allowable credit on Schedule A-3, Part I.
- CBT-100U filers skip Part VI and complete Part VII, Section A. Members not sharing their credit also complete Section B and fill in the non-sharing oval at the top of the form. Report the allowable credit in the member's column of Schedule A-3, Part I.
Partnerships: Complete Parts I, II, either III or IV, and V, then attach Form 306 to NJ-CBT-1065. Do not complete Parts VI or VII. Include each corporate partner's share of qualifying activities and the credit in Schedule NJK-1, Part IV, Supplemental Information.
Common mistakes
- Using the wrong year's form or recalculating old credits. Use the version for the tax period being filed. Report prior carryforwards on line 29 without recomputing them.
- Counting research performed outside New Jersey. Only research activities performed in New Jersey qualify.
- Reusing expenses for incompatible credits. Amounts used for this credit cannot also be used for the Recycling Equipment, Manufacturing Equipment and Employment Investment, New Jobs Investment, or Angel Investor tax credits.
- Including excluded federal credit expenses. Do not include wages used to compute the Federal Jobs Credit or expenses and payments taken as part of the federal Orphan Drug Credit.
- Completing both research expense methods. If using the alternative simplified method, complete Part IV and leave Part III blank.
- Missing combined-return steps. All combined return filers complete Part VII, Section A, even if they do not share their credit. Non-sharing members also complete Section B.
- Overstating the usable credit. List other credits already applied to the tax liability. This credit cannot reduce tax below the applicable statutory minimum.
Questions people ask
What is the New Jersey credit rate?
The New Jersey credit is fixed at 10%. Part V applies that rate to the calculated amount, then adds prior-year carryforwards and credits reported on NJK-1s.
Can unused credit be carried forward?
Generally, unused credit may be carried forward for seven years. Qualifying research in advanced computing, advanced materials, biotechnology, electronic device technology, environmental technology, and medical device technology may qualify for a 15-year carryforward.
Can an S corporation pass this credit to shareholders?
No. A New Jersey S corporation may use the credit against its own New Jersey Corporation Business Tax liability, but cannot pass it through to shareholders.
Can a cannabis licensee claim the credit?
A registered cannabis licensee that deducts a qualified research expense on its New Jersey Corporation Business Tax return may also claim that expense for this credit, even if it was disallowed for the federal research credit. Follow Part II, question 3, and include a detailed attachment explaining the calculations.
Must combined-group members share their credits?
No. Members may choose not to share. A non-sharing member must still complete Part VII, Section A, as well as Section B, and fill in the non-sharing oval at the top of the form.