A 5165 — "End Data Center Tax Credits Act"; reduces tax credits available for Next New Jersey Program.*

A5165 1R [First Reprint] ASSEMBLY, No.

Assemblyman  ANDREW MACURDY District 21 (Middlesex, Morris, Somerset and Union) Assemblyman  BALVIR SINGH District 7 (Burlington) Assemblywoman  ANNETTE QUIJANO District 20 (Union)    Co-Sponsored  by:   SYNOPSIS      "End Data Center Tax Credits Act";

authorizesAssemblymen BPUBailey, toWalker issueand taxAssemblywoman creditsBrennan for  energy  storage  projects;  SYNOPSIS       "End Data Center Tax Credits Act";

establishes temporary gross income tax credit to certain residential ratepayers;

  CURRENT VERSION OF TEXT      As introduced.reported by the Assembly State and Local Government Committee on June 23, 2026, with amendments.

   An Act concerning1[concerning tax credit incentives for energy storage and cost relief to ratepayers,ratepayers] reducing the availability of tax credits for the Next New Jersey Program1, designated as the "End Data Center Tax Credits Act," 1and1 amending various1[various parts of the statutory law, and supplementing P.L.2025, c.136 and Title 54A of the New Jersey Statutes.Statutes] P.L.2020, c.1561.

            1.   1.   Section 98 of P.L.2020, c.156 (C.34:1B-362) is amended to read as follows:

[and] 1and1 the "Next New Jersey Manufacturing Program Act," P.L.2025, c.123 (C.34:1B-403 et al.);al.)1[;

and the "End Data Center Tax Credits Act," P.L.    ,P.L.    , c.     (C.        ) c.     (C.        ) (pending before the Legislature as this bill)bill)]1 shall not exceed an overall cap of $11.5 billion over a nine-year period, subject to the conditions and limitations set forth in this section.  Of this $11.5 billion, $2.5 billion shall be reserved for transformative projects approved under the Aspire Program.

     (d) (d)   for tax credits awarded under the "Food Desert Relief Act," sections 35 through 42 of P.L.2020, c.156 (C.34:1B-303 through 34:1B-310), the total value of tax credits annually awarded during each of the first six years of the nine-year period shall not exceed $40 million;

     (g) (g)   except as provided in subparagraph (j) of this paragraph, for tax credits awarded for transformative projects under the "New Jersey Aspire Program Act," sections 54 through 67 of P.L.2020, c.156 (C.34:1B-322 through 34:1B-335), the total value of tax credits awarded during the nine-year period shall not exceed $2.5 billion.  The total value of tax credits awarded for transformative projects in a given year shall not be subject to an annual limitation, except that the total value of tax credits awarded to any transformative project shall not exceed $400 million;

     (h) (h)   from the tax credits made available, pursuant to subparagraph (f) of this paragraph, to the "New Jersey Aspire Program Act," sections 54 through 67 of P.L.2020, c.156 (C.34:1B-322 through 34:1B-335), and the "Emerge Program Act," sections 68 through 81 of P.L.2020, c.156 (C.34:1B-336 et al.), not including tax credits awarded for transformative projects, an amount not to exceed $350,000,000 shall be made available for qualified offshore wind projects awarded a credit pursuant to section 6 of P.L.2010, c.57 (C.34:1B-209.4) during the first three years of the nine-year period;

     (i)  (i)    beginning in fiscal year 2023, from the tax credits made available, pursuant to subparagraph (f) of this paragraph, to the "New Jersey Aspire Program Act," sections 54 through 67 of P.L.2020, c.156 (C.34:1B-322 through 34:1B-335), and the "Emerge Program Act," sections 68 through 81 of P.L.2020, c.156 (C.34:1B-336 et al.), not including tax credits awarded for transformative projects, additional amounts shall be made available for New Jersey studio partners, New Jersey film-lease production companies, and taxpayers, other than New Jersey studio partners and New Jersey film-lease production companies pursuant to sections 1 and 2 of P.L.2018, c.56 (C.54:10A-5.39b and C.54A:4-12b);

     (j)  (j)    beginning in fiscal year 2024, from the tax credits made available, pursuant to subparagraph (f) of this paragraph, to the "New Jersey Aspire Program Act," sections 54 through 67 of P.L.2020, c.156 (C.34:1B-322 through 34:1B-335) and the "Emerge Program Act," sections 68 through 81 of P.L.2020, c.156 (C.34:1B-336 et al.), not including tax credits awarded for transformative projects, an amount not to exceed $500,000,000 may be annually transferred for the award to transformative projects under the "New Jersey Aspire Program Act," sections 54 through 67 of P.L.2020, c.156 (C.34:1B-322 through 34:1B-335), provided that:

and      (m)(m)  beginning in fiscal year 2026, from the tax credits made available, pursuant to subparagraph (f) of this paragraph, to the "New Jersey Aspire Program Act," sections 54 through 67 of P.L.2020, c.156 (C.34:1B-322 through 34:1B-335) and the "Emerge Program Act," sections 68 through 81 of P.L.2020, c.156 (C.34:1B-336 et al.), but not including tax credits awarded for transformative projects, an amount not to exceed $500,000,000 shall be made available for projects awarded a tax credit pursuant to the “Next New Jersey Manufacturing Program Act,” P.L.2025, c.123 (C.34:1B-403 et al.) and an amount not to exceed $500,000,000 shall be made available for cultural arts institutions awarded a tax credit pursuant to the “Cultural Arts Incentives Program Act,” P.L.2023, c.197 (C.34:1B-383 et al.).

     (n) 1[(n)           beginning in fiscal year 2027, from the tax credits made available, pursuant to subparagraph (f) of this paragraph, to the "New Jersey Aspire Program Act," sections 54 through 67 of P.L.2020, c.156 (C.34:1B-322 through 34:1B-335) and the "Emerge Program Act," sections 68 through 81 of P.L.2020, c.156 (C.34:1B-336 et al.), but not including tax credits awarded for transformative projects, an amount not to exceed $250,000,000 shall be made available for the purposes of the "End Data Center Tax Credits Act," P.L.    , c.     (C.        ) (pending before the Legislature as this bill), including an amount not to exceed $125,000,000 for tax credits awarded to energy storage projects pursuant to section 4 of P.L.    , c.     (C.        ) (pending before the Legislature as this bill), except as otherwise provided in this subparagraph.  If the balance of tax credits claimed pursuant to section 6 of P.L.    , c.     (C.        ) (pending before the Legislature as this bill) is less than $125,000,000, the remaining balance of tax credits, as certified by the State Treasurer, shall be available for the purposes of section 4 of P.L.    , c.     (C.        ) (pending before the Legislature as this bill).  After the completion of the nine-year period, any uncommitted balance of tax credits available for the purposes of P.L.    , c.     (C.        ) (pending before the Legislature as this bill) shall remain available for the purposes of section 4 of P.L.    ,P.L.    , c.     (C.        ) c.     (C.        ) (pending before the Legislature as this bill).bill).]1      (2)   The authority may in any given year determine that it is in the State's interest to approve an amount of tax credits in excess of the annual limitations set forth in paragraph (1) of this subsection, but in no event more than $200,000,000 in excess of the annual limitation, upon a determination by the authority board that such increase is warranted based on specific criteria that may include:

     (2) (i)    Thethe authorityincreased maydemand infor anyopportunities given year determine that it is in the State's interest to approvecreate anor amountretain ofemployment taxand creditsinvestment in excess of the annualState limitationsas setindicated forthby inthe paragraphvolume (1) of thisproject subsection,applications butand inthe noamount event more than $200,000,000 in excess of thetax annualcredits limitation,being uponsought a determination by thethose authorityapplications; board that such increase is warranted based on specific criteria that may include:

     (i)  (ii)   the increasedneed demand for opportunities to createprotect orthe retainState's employmenteconomic andposition investment in the Stateevent as indicated by the volume of projectan applicationseconomic anddownturn; the amount of tax credits being sought by those applications;

     (ii) (iii)  the needquality toof protectproject applications and the State'snet economic positionbenefit into the eventState ofand anmunicipalities economicassociated downturn;with those applications;

     (iii)(iv)  theopportunities qualityfor of project applications andto thestrengthen netor economicprotect benefitthe tocompetitiveness of the State andunder municipalitiesthe associatedprevailing withmarket thoseconditions; applications;

     (iv)(v)   opportunitiesenhanced foraccess project applications to strengthenemployment orand protectinvestment thefor competitivenessunderserved ofpopulations thein Statedistressed undermunicipalities theand prevailingqualified marketincentives conditions;tracts;

     (v) (vi)  enhancedincreased accessinvestment toand employment andin investmenthigh-growth fortechnology underservedsectors populationsand in distressedprojects municipalitiesthat andentail qualifiedcollaboration incentiveswith tracts;education institutions in the State;

     (vi) increased investment and employment in high-growth technology sectors and in projects that entail collaboration with education institutions in the State;

     c.   c.     In the event that the authority in any year approves projects for tax credits in an amount less than the annual limitations set forth in paragraph (1) of subsection b.

     (1) (1)   in fiscal year 2023, $250,000,000 for New Jersey studio partners and $250,000,000 for New Jersey film-lease production companies;

     (2) (2)   in fiscal year 2024, $250,000,000 for New Jersey studio partners and $250,000,000 for New Jersey film-lease production companies;

and      (3) (3)   in fiscal year 2025, $250,000,000 for New Jersey studio partners, $250,000,000 for New Jersey film-lease production companies, and $300,000,000 for taxpayers, other than New Jersey studio partners and New Jersey film-lease production companies.

P.L.2025, c.127, s.10)        2.   1[2. Section 1 of P.L.2025, c.136 (C.48:3-121.2) is amended to read as follows:

Section 1 of P.L.2025, c.136 (C.48:3-121.2) is amended to read as follows:

and paid upon commercial operation of the eligible project, unless the board provides for an alternative payment timeline.  An “incentive award” is subject to any conditions imposed by the board, including, but not limited to, satisfactory up-time performance metrics.  An “incentive award” may include, at the discretion of the board, a performance-based adjustment based on the availability of the eligible project or the benefits created through the commercial operation of the eligible project, provided that the board shall confirm the reliability of any proposed metrics on which to base a performance-based adjustment prior to being used in the calculation of an incentive award.  An "incentive award" may include, at the discretion of the board, an award of tax credits approved pursuant to section 4 of P.L.    ,P.L.    , c.     (C.        ) c.     (C.        ) (pending before the Legislature as this bill), which award of tax credits may constitute part or all of the incentive award.

P.L.2025, c.136, s.1)s.1)]1        3.   1[3. Section 2 of P.L.2025, c.136 (C.48:3-121.3) is amended to read as follows:

Section 2 of P.L.2025, c.136 (C.48:3-121.3) is amended to read as follows:

(1) The Board of Public Utilities shall establish a program to procure and provide incentive awards for the development of transmission-scale energy storage systems with a reasonable likelihood of successful and timely completion.  The board shall solicit applications for the program established pursuant to this section in an initial Tranche 1 and in Tranche 2, pursuant to paragraph (2) of this subsection.  The board may place an eligible project that does not receive an incentive award for Tranche 1 or Tranche 2 on a waiting list and consider the eligible project for an incentive award during a subsequent tranche.       (2) (2)   By no later than June 30, 2026, the board shall approve incentive awards for eligible projects totaling at least 1,000 MW AC in installed capacity.  However, at least 350 MW AC of the 1,000 MW AC procurement goal shall be approved in incentive awards for eligible projects in Tranche 1 by no later than December 31, 2025.  If the board is unable to procure all 1,000 MW AC in installed capacity in Tranche 1, the board shall approve incentive awards for eligible projects in Tranche 2, provided that all incentive awards in Tranche 2 are awarded by no later than June 30, 2026.       b.    To qualify for an incentive award in Tranche 1 or Tranche 2 pursuant to this section, a transmission-scale energy storage system shall:

and      (4) meet any other eligibility criteria the board may establish through board order or rulemaking.       c.   c.     Any application for an incentive award issued in Tranche 1 or Tranche 2 pursuant to this section shall include:       (1) evidence reasonably satisfactory to the board of site control;

and      (4) whether the project promotes redevelopment, community benefits, brownfield redevelopment, or existing or former fossil fuel plant replacement or provides demonstrated benefits to environmental justice in communities where a transmission-scale energy storage system is proposed to be located.       e.   e.     Any board order issued pursuant to P.L.2025, c.136 (C.48:3-121.2 et al.) shall be binding and enforceable.  Any such board order shall:       (1) define the eligible project receiving an incentive award and the eligible project’s installed capacity;

P.L.2025, c.136, s.2)s.2)]1        4.   1[4. (New section) a.

(New section) a.

     c.   c.     A developer may apply a tax credit awarded pursuant to this section against a State tax liability due pursuant to the "Corporation Business Tax Act (1945)," P.L.1945, c.162 (C.54:10A-1 et seq.), the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., sections 2 and 3 of P.L.1945, c.132 (C.54:18A-2 and C.54A:18A-3), section 1 of P.L.1950, c.231 (C.17:32-15), or N.J.S.17B:23-5 for the current tax period, as of the date the tax credit is approved.  A developer may carry forward an unused credit resulting from the limitations of this section, if necessary, for use in any of the seven tax periods next following the tax period for which the credit is awarded.

     e.   e.     (1) A business entity that is classified as a partnership for federal income tax purposes shall not be allowed a tax credit pursuant to this section directly, but the amount of tax credit of a taxpayer in respect of a distributive share of entity income, shall be determined by allocating to the taxpayer that proportion of the tax credit acquired by the entity that is equal to the taxpayer's share, whether or not distributed, of the total distributive income or gain of the entity for its taxable year ending within or with the taxpayer's taxable year.

     (2) (2)   A New Jersey S Corporation shall not be allowed a tax credit pursuant to this section directly, but the amount of tax credit of a taxpayer in respect of a pro rata share of S Corporation income, shall be determined by allocating to the taxpayer that proportion of the tax credit acquired by the New Jersey S Corporation that is equal to the taxpayer's share, whether or not distributed, of the total pro rata share of S Corporation income of the New Jersey S Corporation for its privilege period ending within or with the taxpayer's taxable year.year.]1        1[5.