Biotech has a lot of potential, but it comes with plenty of risk, too. A lot of biotech startups go through years and years of trials before they start seeing even a dollar of profit.
Fortunately, state governments know just how much of a boost successful biotech enterprises can offer to the local economy. As a result, many provide incentives to help early-stage companies weather those extremely lean years.
Programs vary from state to state. Today, we want to highlight what’s on offer in four states where we’re seeing a lot of biotech activity from our clients: New York, New Jersey, Massachusetts, and California.
To give you a brief overview, we’re hitting two programs you should know about in each locale. Our team can help you dig into the other opportunities on the table.
New Jersey: NOL program and angel investor credit
The Garden State prides itself on its life sciences businesses. It self-reports that it’s the #2 state for biotech strength and the #3 regional U.S. life sciences cluster. 14 of the top 20 pharmaceutical companies have a presence in the state.
It’s not surprising, then, that New Jersey has a range of programs designed to help biotech companies operating in the state. For early-stage firms, some of the most useful tend to be:
- The Net Operating Loss (NOL) Program: If you won’t have any profit for the two tax years prior and you have employees in New Jersey, you can potentially turn your NOLs and unused R&D tax credits into cash. Essentially, you can sell your NOLs or R&D credits at market value, putting cash in your company coffers. The state puts a lifetime cap on this program of $20 million per business.
- The Angel Investor Credit Program: This allows your investors to tap into state tax credits or even cash rebates in exchange for their investment in your company. New legislation goes into effect in 2026. Moving forward, only companies with fewer than 150 employees can qualify. But the change also increases the award amount for qualified investment from 20% to 35%.
New York: The QETC program and life sciences R&D tax credits
START-UP NY used to offer tax-free operations when startups located their business on or near an eligible college campus. But this program closes to new applicants on December 31, 2025.
That doesn’t mean you’re without support in the Empire State, though. Core options you should know about include:
- The Qualified Emerging Technology Company (QETC) Program: With its focus on emerging technologies, this program is ideal for biotech startups. If you have annual product sales of $10 million or less, you can potentially get certified at a QETC. This makes you eligible for an employment credit ($1,000 per eligible employee) and a capital tax credit for your investors.
- State Life Sciences R&D Tax Credit: Similar to the federal R&D tax credit, this option lets you reduce your tax bill for the money you’re paying in-state on research and development. If you have fewer than 10 employees, the credit equals 20% of your qualifying research expenses. Once you cross the 10-employee threshold, it drops to 15%.
These incentives generally come with short lifespans (you can claim them for 3–4 years in most instances). For the early years of getting your biotech company off the ground, though, they can be a lifeline.
Massachusetts: MLSC tax incentives and life science tax credits
It’s been a big year for biotech boons in the Bay State. Specifically, nearly $30 million in tax incentive awards got distributed to almost three dozen life sciences companies. At the same time, the Mass Leads Act was passed, reauthorizing $500 million aimed at stimulating the state’s life sciences sector.
If you missed that wave, don’t worry. The Massachusetts Life Sciences Center (MLSC), the driving force behind all of this, isn’t done yet. Some key options for biotech startups in Massachusetts include:
- MLSC Tax Incentives: This program offers refundable tax credits to eligible companies (more details below), plus other incentives like an extension of your net operating losses from five to 15 years. To qualify, you need to have at least 10 full-time equivalent employees in the state and commit to new hires in the coming year. The tax incentive program works on a cycle application period. Typically, it’s opened up in December and closed in February, although 2025’s ran over the summer. Keep an eye on the MLSC’s website so you know when a new application window opens.
- Five different life science tax credits: Part of the money going into the MLSC funds these credits, which are specifically for life sciences companies. The credits include the Refundable Investment Tax Credit (ITC), the Refundable FDA User Fees Tax Credit, the Refundable Section 38M Research Tax Credit, the Research Tax Credit, and the Refundable Jobs Tax Credit. The refundable part is key. That means that if you don’t have tax liability yet, you can get cash back.
California: R&D and California Competes tax credits
With biotech hubs from the southernmost part of the state (looking at you, San Diego) all the way up to the Bay Area, the Golden State has a lot on offer here. More than 70,000 biotech R&D employees work throughout the state, and California is the leading exporter of medical equipment and supplies.
The state programs helping to back all of this activity include:
- State R&D Tax Credit: California bases this credit on the federal R&D credit for which you qualify, which can make calculations simpler. It lets you take a credit of 15% of your qualified California-based expenses that exceed your base amount (which you calculate just like the federal credit). You can also get a credit for 24% of basic research payments.
- California Competes Tax Credit (CCTC): This program is designed to encourage businesses to relocate to California or stay in the state. In 2026, it will have more than $600 million up for grabs. You need to apply, and evaluators with the CCTC program will look at the number of jobs you could create and your potential for growth, among other factors. Because biotech companies have a history of thriving in the state, this could be a great way to get your hands on a tax credit.
Again, all of the above is just a quick overview. We hit some of the state incentives available to biotech companies, but there’s more. If you want to learn about any of these programs or the other benefits available to your biotech company, contact our team. We specialize in supporting companies like yours.
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