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S 4390

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

2026-2027 Regular Session Introduced by Renee Burgess and 6 co-sponsors

Redirect $250M from Next NJ to energy storage tax credits (up to $125M) and a one-time $100 NJ gross income tax credit for low-income residential ratepayers.

Passed Assembly (Passed Both Houses) (74-4-0)
0
WeVote Research Nonpartisan
Bill Summary · S 4390

Bill Overview

  • Bill: S 4390
  • Session/Jurisdiction: New Jersey, 222nd Legislature
  • Title: End Data Center Tax Credits Act
  • Primary aim: Reallocate funds from the Next New Jersey (Next NJ) program to energy storage incentives and provide a one-time gross income tax credit for low-income residential ratepayers.

Main Purpose and Intent

  • Reduce the Next New Jersey Program’s uncommitted tax credits by $250 million.
  • Redirect that amount to two new/expanded mechanisms: 1) Energy storage project incentives administered by the Board of Public Utilities (BPU) through tax credits. 2) A one-time $100 tax credit for low-income residential electric customers (gross income tax relief).
  • Establish a framework to deploy energy storage incentives while preserving a total program cap across the ERA (Economic Recovery Act) programs.

Key Provisions and Changes

  • Reallocation and caps (Section 98 of P.L.2020 and amendments):
    • Overall ERA cap remains $11.5 billion over nine years, with $2.5 billion reserved for transformative Aspire Program projects.
    • Specific program caps remain for various components; a new focus is added for energy storage (via tax credits) and the energy storage program jurisdiction of the BPU.
  • Energy storage tax credits (New section 4 and related amendments):
    • The BPU may award tax credits up to a cumulative total of $125 million for energy storage projects, in connection with an energy storage program (which includes the Garden State Energy Storage Program and other storage initiatives).
    • Tax credits may be used by developers as part of incentive awards for eligible energy storage projects; credits may be transferable (tax credit transfer certificates) to other taxpayers, with sales subject to rules (minimum 80% of transferred value required).
    • Provisions cover application requirements, eligibility criteria, project maturity, interconnection readiness, performance metrics, and board-directed conditions.
  • Energy storage program structure (New section 4; Section 2 amendments to P.L.2025, c.136):
    • Establishes Tranche 1 and Tranche 2 procurement goals targeting at least 1,000 MW AC installed capacity, with timelines (Tranche 1 by end of 2025; Tranche 2 by mid-2026).
    • Eligibility criteria emphasize PJM interconnection status, readiness deposits, permits, site control, financial capability, safety compliance, and coordination with PJM and utilities.
    • The BPU will review and award incentive agreements (for 15-year terms) with specified payment structures, performance metrics, and possible adjustments.
    • Rules allow the board to amend funding sources, including potential inclusion of energy storage tax credits to supplement incentive awards.
  • One-time residential ratepayer credit (New section 6):
    • For the first taxable year after enactment, residential electric customers with gross income ≤ $55,000 receive a $100 credit against New Jersey gross income tax.
    • The director will determine credit priority among other credits.
  • Administrative provisions (New section 7):
    • The BPU may immediately adopt necessary rules to implement the act, with temporary regulations effective up to 180 days unless readopted through the standard Administrative Procedure Act process.
    • The State Treasurer will also issue implementing regulations.
  • Effective date:
    • The act takes effect immediately upon enactment.

Who Is Affected

  • Energy storage developers and project developers seeking incentive awards from the energy storage program.
  • Electric public utilities and PJM interconnection processes (for project readiness and interconnection requirements).
  • Taxpayers eligible for energy credits (including those who may transfer tax credits via transfer certificates).
  • Residential electric customers with gross income ≤ $55,000, who would receive the one-time $100 gross income tax credit.
  • State agencies (BPU, Division of Taxation, State Treasurer) implementing the program rules.

Procedural and Timeline Highlights

  • Tranche 1: Targeted approval of at least 350 MW AC by December 31, 2025; full Tranche 1 approvals by June 30, 2026.
  • Tranche 2: All Tranche 2 incentives to be awarded by June 30, 2026 if Tranche 1 does not reach the target.
  • Immediate regulatory authority: BPU and the Treasurer may adopt interim rules immediately, with full rulemaking to follow under the Administrative Procedure Act.
  • Annual and cumulative caps govern tax credit awards, transfers, and the overall nine-year program window with inter-program transfers and reallocation provisions.

Note: This summary focuses on substantive provisions and potential impacts; it does not constitute legal advice.

Compiled from official sources — confirm details with the bill’s official record.

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