(The Center Square) — New Jersey Gov. Phil Murphy has signed a $500 million bill that dangles generous tax incentives to help lure artificial intelligence companies to the state.
The Next New Jersey program, which the state Legislature approved, will offer tax credits worth up to $250 million to companies that get more than half their revenue from AI development or devote more than half their staff to the new technology.
Murphy said the massive investment will help put New Jersey on the map as a hub of artificial intelligence development, tapping into the state’s “talent, world-class educational institutions and global legacy of innovation.”
“The creation of this program will support the growth of AI-related businesses, which could lead to scientific breakthroughs and lifesaving discoveries right in our backyard,” Murphy said in a statement. “AI will be a transformative industry that will change lives and grow our economy and New Jersey is ready to take the lead.”
To be eligible for funding from the program, which the state Economic Development Authority will administer, a project must have $100 million of capital investment and create at least 100 new jobs.
The funding would be based on the number of jobs created, with a cap of 25% of the project’s costs, according to the Murphy administration.
Businesses granted tax incentives will be required to meet job creation and salary benchmarks set by state regulators or risk losing the funding.
Tim Sullivan, the development authority’s chief executive director, said the program builds on New Jersey’s “longstanding legacy in innovation” and will “drive the state’s prominence in the rapidly growing AI industry and create a strategic advantage for our innovators.”
“AI presents an opportunity for new industry development in the state, good-paying jobs for our residents, and a stronger and more diverse economy for the next generation,” Sullivan said.
The new program is part of Murphy’s “AI Moonshot” plan for New Jersey, which his administration announced early this year, which seeks to establish New Jersey as a “home base” for AI research and development.
In December, the Murphy administration announced that it had teamed up with Princeton University on a program that would bring together AI researchers, industry leaders, start-up companies, and other collaborators to advance research and development in the new industry.
Critics have questioned whether New Jersey will see a return on its taxpayer-funded investment, which industry observers say will be a boon for AI companies that receive tax breaks through the program.
In a fiscal note attached to the bill, New Jersey’s Office of Legislative Services said it “cannot determine whether the bill will have a positive or negative net fiscal impact” on the state given a lack of information.
