The New Jersey Economic Development Authority’s (NJEDA) Net Operating Loss (NOL) Program, established in 1999, enables early stage technology and biotechnology companies to sell their net operating losses and R&D tax credits to unrelated corporations with tax liability. This provides innovation-stage companies with immediate liquidity to reinvest in operations, research, and growth. The NJEDA engaged ESI to estimate the program’s economic and fiscal impacts and assess its effectiveness as a policy instrument for supporting New Jersey’s innovation economy.
ESI tracked employment outcomes for participating companies, using a combination of public and commercially available data sources to estimate their current status, size and activity type. ESI then benchmarked the companies participating in the program against overall business growth and survival rates in their industries, built from longitudinal business patterns data from BLS. This method identified an incremental gain in business survival and job growth for firms participating in the program relative to industry averages. This incremental activity was translated to statewide economic and tax revenue impacts using IMPLAN input-output modeling to estimate direct, indirect, and induced contributions.
Companies participating in the NOL Program contributed an estimated $28 billion in total economic impact within New Jersey in 2024, supporting approximately 87,800 jobs with $8.6 billion in employee compensation and generating an estimated $715 million in state tax revenue. The survival rate of NOL Program recipients since program inception was 72 percent, twice the industry benchmark of 36 percent, indicating that the program meaningfully strengthens the viability of innovation-stage companies. The findings provided NJEDA with compelling evidence of the NOL Program’s value as a tool for supporting New Jersey’s innovation economy.