Gov. Murphy signs AI tax incentives into law

The new program offers awards of up to $250 million for firms developing AI or drawing most of their revenue from it. (Edwin J. Torres/NJ Governor’s Office)

Gov. Phil Murphy signed into law Thursday a voluminous new tax incentive program intended to draw artificial intelligence development to the state.

The $500 million program would extend tax incentive awards of up to $250 million to firms that draw more than half their revenue or devote more than half their staff to AI development.

“With our state’s talent, our highly coveted location, and our world-class educational institutions and our global legacy of innovation, we are once again building the future,” Murphy said at a bill signing at the Roseland offices of AI cloud computing firm CoreWeave.

To be eligible, a project must include at least $100 million of capital investment and create no fewer than 100 jobs. The Economic Development Authority would administer the program, called Next New Jersey.

Awards under the program are based on the number of jobs created by a project. Each new job would win an awardee 0.1% of its total capital investment, to a cap of 25% of $250 million, whichever is lower.

The use of AI tools for regular operations does not qualify a business for the tax incentives, which are to be funded through a transfer from the $11.5 billion Aspire tax incentive program. Aspire is meant to provide gap financing for certain projects.

Businesses cannot simultaneously receive awards under Next New Jersey and Emerge, a separate tax incentive program meant to draw businesses and development to disadvantaged areas in New Jersey.

Thursday’s signing advances Murphy’s goals to make New Jersey a hub for artificial intelligence, a technology that officials said has the potential to drastically realign life and work.

“Artificial intelligence is a general-purpose technology. It will transform every industry and transform every aspect of our daily lives, from life-saving health care breakthroughs to traffic jams,” said bill sponsor Sen. Raj Mukherji (D-Hudson).

Businesses that receive tax incentives under Next New Jersey are required to meet job creation and salary benchmarks negotiated with the Economic Development Authority or risk losing some or all of their credits.

Businesses that hire less than 80% of the workers they agreed to hire would lose their tax incentives until they hold up their end of the bargain, as would those who fail to submit certain paperwork to the EDA.

A small number of protestors opposed to a proposed natural-gas backup power plant near the Ironbound section of Newark picketed Murphy’s press conference but were not allowed into CoreWeave’s offices. The Department of Environmental Protection last week said an environmental justice law signed by Murphy would not prevent construction of the plant.

The project’s opponents have charged the plant, which would run for no more than 24 hours a month absent severe weather, would further burden a community that abuts three power plants and have questioned officials’ candor on how frequently it would run. Murphy said it is needed to power a wastewater treatment plant during severe storms and prevent sewage from flowing into Newark’s streets.

“As I’ve debated, in fact, with some of those very protestors, your definition of an environmental calamity and mine, I think, both have legitimacy,” the governor told reporters after the press conference. “You don’t want any plant to run any minute of any day. I get that. With all due respect, I don’t want sewage and other pollution in the streets of Newark the next time, God forbid, a Superstorm Sandy hits.”

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