S 4390 — "End Data Center Tax Credits Act"; reduces tax credits available for Next New Jersey Program.*

S4390 1R [First Reprint] SENATE, No.

BURGESS District 28 (Essex and Union)  Assemblyman   ANDREW  MACURDY  District SYNOPSIS21     (Middlesex, "EndMorris, DataSomerset Centerand TaxUnion) CreditsAssemblyman  Act";BALVIR SINGH District 7 (Burlington) Assemblywoman  ANNETTE QUIJANO District 20 (Union)   Co-Sponsored by:

authorizesSenators BPUMoriarty, toTurner, issueMcKeon, taxAssemblymen creditsBailey, forWalker energyand storageAssemblywoman projects;Brennan         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 Senate Budget and Appropriations Committee on June 24, 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.

[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.    , 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.

     (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.    , c.     (C.        ) (pendingP.L.    , 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)  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:

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:

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:

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

(New section) a.

     (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.

       5.    (New section) a.

     d.    A transferee or assignee of a tax credit transfer certificate pursuant to this section shall not make any subsequent transfers, assignments, or sales of the tax credit transfer certificate.certificate.]1        1[6.

       6.    (New section) a.

for a taxable year, shall be as prescribed by the director.director.]1        1[7.

       7.    (New section) a.

     b.    The State Treasurer shall adopt, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), such rules and regulations as are necessary to implement the provisions of P.L.    , c.     (C.        ) (pending before the Legislature as this bill).bill).]1        1[8.] 2.1     This act shall take effect immediately.

       8.    This act shall take effect immediately.

    STATEMENT        This bill, designated as the "End Data Center Tax Credits Act," reduces the amount of tax credits available for the Next New Jersey Program by $250 million and reallocates the balance of these tax credits for certain energy-related purposes.

Specifically, the bill authorizes the Board of Public Utilities (BPU) to award tax credits to developers of energy storage projects under existing programs and establishes a one-time gross income tax credit to lower-income taxpayers who are residential electric customers.

  Reallocation of Uncommitted Next New Jersey - AI Tax Credits      The "Economic Recovery Act of 2020," P.L.2020, c.156 (ERA), authorized the award of tax credits under the New Jersey Aspire Program, Emerge Program, and certain other economic development programs with limits on the amount of tax credits available under each program.  Under current law, the total value of tax credits available under the ERA is limited to $14 billion over a nine-year period.  Of this amount, $500 million is currently available under the Next New Jersey Program (Next NJ) for certain projects related to the development of artificial intelligence or data centers.  As of May 2026, the New Jersey Economic Development Authority has awarded $250 million in tax credits to one project under Next NJ, which award is not impacted by this bill.

     This bill reduces the total amount of tax credits available under Next NJ by the uncommitted amount of $250 million and reallocates that amount to incentivize energy storage projects and to provide gross income tax credits for lower-income residential electric customers.

  Energy Storage Incentives      The bill authorizes the board to approve the award of tax credits to the developer of an energy storage project, which award will constitute all or part of an incentive award for an energy storage project.

 Under the bill, the Board of Public Utilities may award tax credits with a cumulative value not to exceed $125 million, subject to certain additional allowances.

     Under the bill, "energy storage project" is defined as the construction or enhancement of an energy storage system for which a developer is eligible to receive an incentive award pursuant to an energy storage program.  An "energy storage system" is a distributed energy storage system or a transmission-scale energy storage system.  "Energy storage program" means a program designed to encourage the growth of energy storage capacity in the State in order to strengthen storage capacity for the electric grid.  "Energy storage program" includes, but is not limited to, the board’s Successor Solar Incentive Program, including the Competitive Solar Incentive Program;

the program established pursuant to P.L.2025, c.136 (C.48:3-121.2 et seq.);

and the board’s Garden State Energy Storage Program.

     The bill authorizes the recipient of a tax credit issued as an energy storage incentive to request a tax credit transfer certificate.  A taxpayer is required to attempt to sell or assign a tax credit transfer certificate for consideration of no less than 80 percent of the transferred credit amount before considering any further discounting.

  Income Tax Credits to Reduce Burden of Increased Electricity Costs      For the taxable year in which the bill takes effect, the bill authorizes a one-time gross income tax credit in the amount of $100 for any taxpayer with gross income no more than $55,000, and who is a residential electric customer.  The bill further provides that if less than $125 million one-time gross income tax credits are claimed by taxpayers in the State, the remaining balance of tax credits, as certified by the State Treasurer, is to be made available to the Board of Public Utilities to incentivize energy storage projects.