FORM 306
2023
New Jersey Corporation Business Tax
Research and Development Tax Credit
The previous version of this schedule is available on the Division of Taxation’s website (njtaxation.org)
Do not recompute tax credits for prior
privilege periods or tax year
s on this form.
Read the instructions before completing this form
Note: Amounts included in the calculation of the Research and Development Tax Credit are not permitted to be included in the calculation of the Recycling
Equipment Tax Credit, the Manufacturing Equipment and Employment Investment Tax Credit, the New Jobs Investment Tax Credit, or the Angel
Investor Tax Credit.

Combined Return Filers
The taxpayer is included as a taxable member on a New Jersey combined return. See instructions.
Fill in oval if member is not sharing its credit with other members of the group.


1. Enter certain amounts paid or incurred to energy consortia ................................................................................... 1.
 
2. Enterthebasicresearchpaymentspaidorincurredtoqualiedorganizations ..................................................... 2.
3. Enter the base period amount ............................................................................................................................... 3.
4. Subtractline3fromline2.Ifzeroorless,enterzero ............................................................................................. 4.


.
1.Didyoucalculatethequaliedresearchexpenseportionofyourfederalcreditusingtheregularcreditmethod?
Yes.
Complete Part III.
No. Continue to question 2.
2.Didyouusethealternativesimpliedcreditmethodtocalculateyourcreditforfederalpurposes?
Yes. Complete Part IV (do not make any entries in Part III).
No. Continue to question 3.
3.Areyouacannabislicensee?
Yes.CompletePartIIIifyouwouldhaveusedtheregularcreditmethod.CompletePartIVifyouwouldhaveusedthealternativesimpliedcredit
method. You must include a detailed rider explaining the calculations.
No. You must have used one of the two federal calculation methods in order to complete this form.
 
5.
Wagesforqualiedservices(do not include wages used to compute the Federal Jobs Credit)
............................. 5.
6. Cost of supplies ....................................................................................................................................................... 6.
7. Rental or lease costs of computers ......................................................................................................................... 7.
8. Enter the applicable percentage of contract research expenses (see instructions) ................................................ 8.
9. Totalqualiedresearchexpenses–Addlines5through8 ..................................................................................... 9.
10. Enterxed-basedpercentage,butnotmorethan16% ........................................................................................... 10.
11. Enter average annual gross receipts ....................................................................................................................... 11.
12. Baseamount–Multiplyline11byline10 ............................................................................................................... 12.
13. Subtract line 12 from line 9 ...................................................................................................................................... 13.
14. Enter50%ofline9 .................................................................................................................................................. 14.
15. Enter the lesser of line 13 or 14. (Skip Part IV and continue with Part V) ............................................................... 15.
Name as Shown on Return Federal ID Number Unitary ID Number, if applicable
NU
 Total Research and Development Tax Credit
25a. Enter the amount from line 1 .................................................................................................................................. 25a.
25b. Enter the amount from line 4 .................................................................................................................................. 25b.
25c. Total–Addlines25aand25b ............................................................................................................................... 25c.
26. Enter either line 15 or line 24 (whichever method was used for federal purposes) ............................................... 26.
27. Add lines 25c and 26 ............................................................................................................................................. 27.
28. Multiplyline27by10% .......................................................................................................................................... 28.
29. Research and Development Tax Credit carried forward from prior year (do not recompute) ................................ 29.
30. Totalcreditavailable–Addlines28and29 .......................................................................................................... 30.
 Calculation of the Allowable Credit Amount and Carryover

31. Entertaxliabilityfrompage1,line2aofCBT-100orCBT-100S........................................................................... 31.
32. Enter the required minimum tax liability (see instructions) .................................................................................... 32.
33. Subtract line 32 from line 31 .................................................................................................................................. 33.
34. Other tax credits used by taxpayer on current year’s return (see instructions):
(a)
(b)
(c)
(d) .......................................... Total 34.
35. Subtractline34fromline33.Ifzeroorless,enterzero ........................................................................................ 35.
36. Allowable credit for the current
tax period
. Enter the lesser of line 30 or line 35 here and on
ScheduleA-3,PartIoftheCBT-100orCBT-100S................................................................................................ 36.
Note: Generally, this credit may be carried over for 7 years following the credit’s privilege period or tax year;
however, certain types of research qualify for a 15 year carryover. See instructions for more information.
37. Amount of credit carryover to following year’s return (subtract line 36 from line 30) ............................................. 37.
Name as Shown on Return Federal ID Number Unitary ID Number, if applicable
NU
 
16.
Wagesforqualiedservices
(do not include wages used to compute the Federal Jobs Credit)
............................. 16.
17. Cost of supplies ....................................................................................................................................................... 17.
18. Rental or lease costs of computers ......................................................................................................................... 18.
19. Enter the applicable percentage of contract research expenses (see instructions) ................................................ 19.
20. Totalqualiedresearchexpenses.Addlines16through19 ................................................................................... 20.
21. Enteryourtotalqualiedresearchexpensesfortheprior3
privilege periods or tax year
s.Ifyouhadnoqualied
research expenses in any one of those years, skip lines 22 and 23 and enter the amount from line 20 on line 24 21.
22. Divide line 21 by 6.0 ................................................................................................................................................ 22.
23. Subtractline22fromline20.Ifzeroorless,enterzero.Includehereandonline24 ............................................ 23.
24. Enter amount from line 23 or if you skipped lines 22 and 23, enter amount from line 20 ....................................... 24.
 Calculation of Allowable Credit Amount and Carryover – Combined Return Filers ONLY

38. EnterthegrouptaxliabilityfromScheduleA,SectionII,PartIII,line4a,column(c)ofFormCBT-100U............. 38.
39. Enter the aggregate minimum tax of combined group members (see instructions) ................................................... 39.
40. Subtract line 39 from line 38 .................................................................................................................................. 40.
41. Other tax credits used by this taxpayer on current year’s return (see instructions):
(a)
(b)
(c)
(d) .......................................... Total 41.
42. Subtractline41fromline40.Ifzeroorless,enterzero ........................................................................................ 42.
43. Allowable credit for the current tax period. Enter the lesser of line 30 or line 42.  also enter in the
member’scolumnofScheduleA-3,PartIoftheCBT-100U ................................................................................. 43.


44. 44. Amount of credit carryover to following year’s return (subtract line 43 from line 30) .............................................
Name as Shown on Return Federal ID Number Unitary ID Number, if applicable
NU
NOT 
45. a) Enter combined group tax liability from line 38 ....................................... 45a.
b) Divide line 45a by the combined group allocation factor from
Schedule J, line 9 .................................................................................... 45b.
c) Member’sshareofcombinedgrouptaxliability–Multiplyline45bbymember’sallocationfactorfrom
Schedule J, line 9 .................................................................................... 45c.
46. Required minimum tax liability ................................................................................................................................ 46. 2,000
47. Subtract line 46 from line 45c ................................................................................................................................. 47
48. Other tax credits used by taxpayer on current year’s return (see instructions):
(a)
(b)
(c)
(d) .......................................... Total 48.
49. Subtractline48fromline47.Ifzeroorless,enterzero ......................................................................................... 49.
50. Allowable credit for the current tax period. Enter the lesser of line 43 or line 49 here and in the member’s
columnofScheduleA-3,PartIoftheCBT-100U ................................................................................................... 50.
51. Amount of credit carryover to following year’s return (subtract line 50 from line 30) .............................................. 51.

• Taxpayers must use the version of Form 306 that corresponds with the
taxperiodforwhichyouareling.Previousversionsareavailableonthe
Division’s website (see N.J.A.C.18:7-3.23 forinformationon howthe
credit was calculated in previous privilege periods).
• For tax years ending on and after July 31, 2023, a registered cannabis
licensee that claims a qualied research expense as a deduction on
their New Jersey Corporation Business Tax return may also claim that
expense for purpose of the New Jersey Research and Development
Tax Credit on Form 306, even though such expenses were disallowed
for the federal research and development tax credit. Taxpayers must
include a detailed rider explaining the calculations.
• FortaxyearsbeginningonandafterJanuary1,2020,aqualiedsmall
business within the meaning of section 41(h)(3) of the federal Internal
RevenueCode(26U.S.C.s.41)canincludequaliedexpensesandpay-
ments used for the separate federal payroll credit under I.R.C. § 3111(f)
to calculate their New Jersey R&D credit (see N.J.S.A.54:10A-5.24(d)).
Note: Taxpayers cannot recalculate their R&D credit for prior years.
Thequaliedexpensesandpaymentsusedfortheseparatefed-
eral payroll credit under I.R.C. § 3111(f), can only be included in
the R&D credit calculation for tax years beginning on and after
January1,2020.Additionally,ifthequaliedexpenses and pay-
ments are used in the calculation of another New Jersey Corpora-
tion Business Tax credit, those amounts cannot be used to calcu-
late the R&D credit.
• For
privilege periods or tax year
s beginning on and after January 1,
2018,NewJerseyhasrecoupledtoI.R.C.§41ineectatthattime,but
only the federal corporate income tax credit. The intent was to allow the
newcalculationmethods(e.g.,thealternativesimpliedcredit),tomake
it easier for a business to qualify for the New Jersey R&D Credit, and
to allow amounts paid or incurred to energy consortia in New Jersey to
qualify. Previously the New Jersey R&D Credit was based on I.R.C. §
41ineectonJune30,1992,whichwasnonrefundableforfederalpur-
poses and not refundable for New Jersey Corporation Business Tax pur-
poses. The New Jersey credit made it clear that despite being coupled
to the current federal corporate income tax credit under I.R.C. § 41, any
subsequent changes by Congress (e.g., terminating the federal credit or
making the federal credit refundable) would not have any impact on the
New Jersey credit.
• A credit can be claimed for only those research activities that are per-
formed in New Jersey.
• For
privilege periods or tax year
s ending on and after July 31, 2019,
combined group members included on the same New Jersey combined
return will follow the federal consolidated control group rules applicable
toqualiedresearchexpendituresandqualiedpaymentsforresearch
performed in New Jersey. Each member must complete a separate
schedule to claim their portion of the New Jersey R&D credit. Members
of the same consolidated group must use the same credit calculation
method
• Section references are to the Internal Revenue Code unless otherwise
noted.
• For periods beginning on and after January 1, 2002, any deductions for
research and experimental expenditures, to the extent that those re-
searchandexperimentalexpendituresarequaliedresearchexpenses
or basic research payments for which an amount of credit is claimed
pursuanttosection1ofP.L.1993,c.175(C.54:10A-5.24)unlessthose
research and experimental expenditures are also used to compute a
federal credit claimed pursuant to I.R.C. § 41, if applicable, must be
addedbackonScheduleAoftheCBT-100,CBT-100U,CBT-100S,or
BFC-1onthelinefor“Otheradditions.”RefertotheScheduleAinstruc-
tions of the appropriate return.

Use Form 306 to calculate and claim the credit for increasing the research
activities of a trade or business. Complete Parts I through VII (as applica-
ble) to compute the research credit. Parts VI and VII are used to calcu-
latetheallowablecreditandcarryover.TaxpayerslingFormsCBT-100or
CBT-100ScompletePartVIandCBT-100UlerscompletePartVII.
Taxpayers must include the appropriate credit form in the
year the credit was earned even if they are not claiming the
credit on their tax return.

Generally all of the federal rules and methods for the federal corporate in-
come tax R&D Credit apply when computing the New Jersey R&D Cred-
it.However,theNewJerseycreditisxedat10%.Theexpensesarefor
research in New Jersey. A taxpayer must use the same method that the
taxpayer used for federal purposes and must enclose a copy of the federal
Form6765asledwiththeIRS.
Who Must File
A corporation claiming a credit for increasing research activities should
complete this form and submit it with the tax return.
Note: Taxpayers that claim the Corporation Business Tax Research and
DevelopmentTax CreditforNewJerseyqualiedresearchexpen-
ditures can also deduct those New Jersey expenditures on their tax
return in the same year as they claim the credit, rather than amor-
tizingtheexpenditures.SeeNotice:Timing of New Jersey Qualied
Research Expenditures.
A New Jersey S corporation is allowed to claim a credit in connection with
increasing research activities to the extent of its New Jersey Corporation
Business Tax liability. Pass through of this credit to shareholders is not per-
mitted.
See I.R.C. § 41(f) for special rules related to:
1. Adjustments, if a major portion of a business is acquired or disposed of;
and
2. Short tax years.
Credit Carryover
If the research credit cannot be used because of tax liability limitations, it
may be carried forward for either 7 or 15 years. See the instructions for Part
VI or Part VII, as applicable.
Combined Return Filers
If ling a combined return, the form must be completed by the member
thatearned(purchased)thecredit.All combined return lers must check
thecombinedreturnlersboxatthetopoftheformandcompletePartVII,
Section A.
     In general, tax credits are earned by
a member of the combined group and are shareable with the combined
group. However, members are not required to share their credits. See
N.J.S.A.54:10A-4.6.iandTB-90(R),Tax Credits and Combined Returns.
In addition to Section A, members that choose not to share must also com-
pletePartVII,SectionBandllintheovalatthetopoftheformtoindicate
they are not sharing the credit.



Line 1 – Enter certain amounts paid or incurred to energy consortia in New
Jersey. See I.R.C. § 41.

Line 2 – Corporationsareeligiblefora“basicresearch”creditiftheirpay-
mentsin cash toa qualied universityor scientic researchorganization
(under a written contract) exceed a base period amount (based on their
generaluniversitygivingandcertainothermaintenance-of-eortlevelsfor
the three preceding years). Enter payments on line 2. See I.R.C. § 41(e)
for details.
Line 3 – Enterthebaseperiodamount,asdenedinI.R.C.§41(e),butnot
more than the amount on line 2.

Research and Development Tax Credit

Complete Part III if you used the regular method to calculate your federal
corporate income tax credit. Otherwise, complete Part IV.

Lines 5 through 8pertain to qualied research expenditures paid orin-
curred. See I.R.C. § 41.
Do not include expenses and payments that were taken as part of the feder-
al Orphan Drug Credit to calculate the New Jersey R&D Credit.
: Amounts included in the calculation of the Research and Develop-
ment Tax Credit are not permitted to be included in the calculation of
the Recycling Equipment Tax Credit, the Manufacturing Equipment
and Employment Investment Tax Credit, the New Jobs Investment
Tax Credit, or the Angel Investor Tax Credit.
Line 8 – Use the applicable percentage. This is the percentage that would
apply for federal purposes based on the amounts paid or incurred for qual-
iedresearchperformedonthetaxpayer’sbehalfinNewJersey.Prepaid
tract research expenses are considered paid in the year the research is
actually done.
Line 10 – Thexed-basepercentagedependsonwhetheryouareanex-
isting company or a start-up company.The xed-base percentage for all
companies(existingandstart-up)mustberoundedtothenearest1/100th
of1%(i.e.,fourdecimalplaces)andcannotexceed16%.Anysubsequent
changetothefederalxedbasedpercentageswillalsobereectedhere.

Astart-upcompanyisataxpayerthathadbothgrossreceiptsandqualied
research expenses either:
• Forthersttimeinataxyearbeginningafter1983,or
• For fewer than 3 tax years beginning after 1983 and before 1989.
Forstart-upcompanieswithqualiedresearchexpensesfortaxyearsbe-
ginning after 1993, the xed-base percentage for a start-up company is
guredasfollows:
• Fortherst5taxyears,thepercentageis3%.
• Forthe6thtaxyear,dividetheaggregatequaliedresearchexpenses
for the 4th and 5th tax years by the aggregate gross receipts for those
tax years, then divide the result by 6.
• Forthe7thtaxyear,dividetheaggregatequaliedresearchexpenses
for the 5th and 6th tax years by the aggregate gross receipts for those
tax years, then divide the result by 3.
• Forthe8thtaxyear,dividetheaggregatequaliedresearchexpenses
for the 5th, 6th, and 7th tax years by the aggregate gross receipts for
those tax years, then divide the result by 2.
• Forthe9thtaxyear,dividetheaggregatequaliedresearchexpenses
for the 5th, 6th, 7th, and 8th tax years by the aggregate gross receipts
for those tax years, then divide the result by 1.5.
• Forthe10thtaxyear,dividetheaggregatequaliedresearchexpenses
for the 5th through 9th tax years by the aggregate gross receipts for
those tax years, then divide the result by 1.2.
• Forthe11thandlatertaxyears,dividetheaggregatequaliedresearch
expenses for any 5 of the 5th through 10th tax years by the aggregate
gross receipts for those tax years.

Thexed-basepercentageforanexistingcompany(anycompanythatis
nota start-up company)isguredbydividing the aggregate qualiedre-
search expenses for the tax years beginning after 1983 and before 1989 by
the aggregate gross receipts for those tax years.
Line 11 – Enter the average annual gross receipts (reduced by returns and
allowances) for the 4 tax years preceding the tax year for which the credit is
beingdetermined.Youmayberequiredtoannualizegrossreceiptsforany
short tax year. This is determined by using line 1 (less returns and allowanc-
es) from Schedule A of the 4 preceding tax years.
For a tax year that the credit terminates, the average annual gross receipts
for the 4 tax years preceding the termination tax year is prorated for the
number of days the credit is applied during the tax year.

CompletePartIVifyouusedthealternativesimpliedcreditmethodtocal-
culate your federal corporate income tax credit. Otherwise, use Part III. An
AlternativeSimpliedCredit(ASC)electioncanbemadeonanamended
return for a tax year only if you have not previously claimed the research
credit on an original return or amended return for that tax year. An extension
of time to make the ASC election will not be granted.


Line 16 through 20pertaintoqualiedresearchexpenditurespaidorin-
curred in New Jersey. See I.R.C. § 41.
Do not include expenses and payments that were taken as part of the feder-
al Orphan Drug Credit to calculate the New Jersey R&D Credit.
: Amounts included in the calculation of the Research and Develop-
ment Tax Credit are not permitted to be included in the calculation of
the Recycling Equipment Tax Credit, the Manufacturing Equipment
and Employment Investment Tax Credit, the New Jobs Investment
Tax Credit, or the Angel Investor Tax Credit.
Use the applicable percentage. This is the percent-
age that would apply for federal purposes based on the amounts paid or
incurredforqualiedresearchperformedonthetaxpayer’sbehalfinNew
Jersey. Prepaid tract research expenses are considered paid in the year the
research is actually done.

This is where the actual credit amount is calculated. Unlike the federal cor-
porate income tax credit, which has percentage rates that vary depending
onthecreditmethod,theNewJerseycreditisxedat10%.
You must report the credit you carried over from prior
privilege periods or
tax year
s on line 29. Do not recompute your tax credit for previous
privilege
periods or tax year
s on this form. All credit carryovers must be calculated
usingthelawsthatwereineectforthattaxperiod.Previousversionsofthe
form are available on the Division of Taxation’s website.


ForCBT-100and CBT-100S lers, the allowable
Research and Develop-
ment Tax Credit for the current year is calculated in Part VI.
Combined re-
turnlersdonotcompletePartVI,andmustcompletePartVIIinstead.
The
amount of the credits applied cannot reduce the tax liability to an amount
less than the statutory minimum.
Line 32 – The minimum tax is assessed based on the New Jersey Gross
Receipts as follows:
  
Less than $100,000 $ 500 $ 375
$100,000 or more but less than $250,000 750 562
$250,000 or more but less than $500,000 1,000 750
$500,000 or more but less than $1,000,000 1,500 1,000
$1,000,000 or more 2,000 1,500
Ifataxpayerislingaseparatereturnandisamemberofanaliatedor
controlled group that has a total payroll of $5,000,000 or more for the re-
turn period, the minimum tax is $2,000. Tax periods of less than 12 months
are subject to the higher minimum tax if the prorated total payroll exceeds
$416,667 per month.
Taxpayers claiming multiple credits must list any credits already
applied to the tax liability to ensure accuracy of the calculation for maximum
credit allowable.
Carryover Time Frame. Although there is a limitation of the amount of
credit allowed in any one
privilege period or tax year
, generally the amount
of unused tax credit may be carried forward to each of the 7 account-
ing years following the credit’s
privilege period or tax year
(N.J.S.A. Sec.
54:10A-5.24).AtaxpayerthathasbeenallowedaResearchandDevelop-
mentCreditforthescalorcalendaraccountingperiod(
privilege period or
tax year
)inwhichthequaliedresearchexpenseshavebeenincurredand
basic research payments have been made for research conducted in New
Jerseyintheeldsofadvancedcomputing,advancedmaterials,biotech-
nology, electronic device technology, environmental technology, and medi-
cal device technology, are allowed to carry over the amount of the
privilege
period or tax year
credit that could not be applied for the
privilege period or
tax year
to each of the 15
privilege periods or tax year
s following the credit’s
privilege period or tax year
. (N.J.S.A.Sec.54:10A-5.24b).
        
and Carryover for Combined Return Filers
ForCBT-100Ulers,theallowableResearchandDevelopmentTaxCredit
forthecurrentyeariscalculatedinPartVII.Allcombinedreturnlersmust
complete Section A. Members that choose not to share their credit must
also complete Section B.

This section calculates the amount of credit allowable for the group. If a
member chooses not to share their credit with the group, Section A must still
be completed to ensure the credit allowed for the member does not exceed
the amount that would otherwise be allowed against the group tax liability.
The amount of the credit calculated in this section cannot reduce the tax
liability to an amount less than the aggregate statutory minimum tax of the
group members.
Line 39 –Multiply thenumberoftaxable groupmembersby$2,000and
enter the result.
–Combinedgroupsclaimingmultiplecreditsmustlistanycredits
already applied to the group tax liability to ensure accuracy of the calcula-
tion for maximum credit allowable.
Carryover Time Frame. Although there is a limitation of the amount of
credit allowed in any one
privilege period or tax year
, generally the amount
of unused tax credit may be carried forward to each of the 7 account-
ing years following the credit’s
privilege period or tax year
(N.J.S.A. Sec.
54:10A-5.24).AtaxpayerthathasbeenallowedaResearchandDevelop-
mentCreditforthescalorcalendaraccountingperiod(
privilege period or
tax year
)inwhichthequaliedresearchexpenseshavebeenincurredand
basic research payments have been made for research conducted in New
Jerseyintheeldsofadvancedcomputing,advancedmaterials,biotech-
nology, electronic device technology, environmental technology, and medi-
cal device technology, are allowed to carry over the amount of the
privilege
period or tax year
credit that could not be applied for the
privilege period or
tax year
to each of the 15
privilege periods or tax year
s following the credit’s
privilege period or tax year
. (N.J.S.A.Sec.54:10A-5.24b).

This section is used to calculate the amount of credit allowable for members
that choose not to share their credit with the group. Section B is completed
based on the member’s share of the group tax liability. The amount of the
credit calculated in this section cannot reduce the tax liability to an amount
less than $2,000. The amount of the credit is also limited to the amount that
would otherwise be allowed against the group tax liability if the member had
been sharing the credit.
–Membersclaimingmultiplecreditsmustlistanycreditsalready
applied to the member’s tax liability to ensure accuracy of the calculation for
maximum credit allowable.