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Bill

A 3918

"Green Building Tax Credit Act."

2026-2027 Regular Session Introduced by Robert Karabinchak

New Jersey would create a time-limited tax credit program to incentivize designing, constructing, or retrofitting green buildings to defined standards or LEED, with credits up to 4

Introduced, Referred to Assembly Environment and Solid Waste Committee
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Bill Summary · A 3918

Overview

A 3918, 2026 session, New Jersey, titled the Green Building Tax Credit Act, would create a state-level tax credit program to encourage the design, construction, and retrofit of green buildings that meet defined standards or LEED certification. The act is administered by the Department of Community Affairs (DCA) in coordination with the Department of Environmental Protection (DEP) and the Division of Taxation.

Purpose and intent

  • Promote green building practices across New Jersey by providing financial incentives to developers and building owners.
  • Encourage compliance with a set of standards to be adopted by the DCA (in consultation with the DEP) and recognized LEED rating systems.
  • Establish a tractable, time-limited program with annual credit caps and a rolling carryover to maximize uptake while controlling cost.

Key provisions and changes

  • Definition of green building standards:
    • Standards to be adopted within one year after enactment, covering energy efficiency, materials, water efficiency, indoor air quality, waste management, stormwater, durability, and related building practices.
    • Standards must be reviewed and updated at least every two years.
    • Residential and non-residential buildings may achieve eligibility via compliance with the standards or via LEED (Certified, Silver, Gold, Platinum) statuses.
  • Eligible costs:
    • Allowable costs include construction/rehabilitation costs, commissioning, interest during construction, professional fees, site costs, and related interior build-out costs, with certain exclusions (e.g., fuel cells, photovoltaic modules, and certain telephone/computer costs).
    • Capped at 280 per square foot of interior space (with potential to increase up to 10% on up to two occasions in the seven-year period following enactment).
  • Tax credits:
    • Available against several taxes: Corporation Business Tax, New Jersey Gross Income Tax, and certain utility/insurance-related taxes.
    • Credit amount: 4.0% of eligible costs plus an additional tiered percentage (0.5%, 1.0%, 1.5%, or 2.0%) of eligible costs for buildings meeting LEED/LEED Residential criteria, respectively.
    • Total credits limited by a credit reservation process.
  • Credit reservation and eligibility:
    • Applicants must obtain a credit reservation certificate from the DCA, specifying the earliest eligible tax year, total and annual credit limits, expiration date, and other details.
    • Eligibility certificates required for first-year claims, including engineer/architect certification that the building meets standards or LEED criteria, occupancy certification, and a commitment to keep the building in service during the applicable year.
    • Certificates cannot be issued for buildings that received permits before the act’s effective date.
  • Allocation and administration:
    • Initial year limited to $20 million in credits; subsequent six years limited to $50 million per year, with any unused amounts rolling to future years.
    • Annual per-taxpayer cap: no more than 20% of the total credit amount available under section 3 can be claimed in a single tax year.
    • Carryforward: unused credits may be carried forward for up to 15 years.
    • Transferable credits: if a property or ownership interest is sold, remaining credits may transfer to the successor owner if the deed and notifications are executed; otherwise, credits stay with the original owner.
  • Compliance and enforcement:
    • Taxpayers must maintain records and report information as determined by the DCA and the Division of Taxation.
    • If professional misconduct is suspected in certification, the DCA must report to the relevant licensing boards.

Who is affected

  • Developers, builders, and building owners undertaking new construction or retrofit projects intended to meet green building standards.
  • Taxpayers subject to New Jersey Corporation Business Tax, Gross Income Tax, and related taxes who qualify for the credit.
  • Design professionals (architects/engineers) involved in certification and compliance processes.

Timelines and procedural notes

  • Standards adoption: within one year after enactment; ongoing updates every two years.
  • Credit availability: seven-year window from enactment; credits allocated on a first-come, first-served basis, subject to annual caps.
  • Reporting: six-year window to publish a comprehensive impact report (with an initial draft within four years).

Practical considerations

  • The bill creates a significant, but time-limited, fiscal incentive to advance green building practices in New Jersey.
  • The effectiveness will depend on timely adoption of standards, robust application processing, and oversight to ensure compliance and prevent misuse.
  • The interaction with LEED may broaden eligibility but requires alignment with national rating systems.

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

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