This bill amends New Jersey tax law to provide significant tax relief for small businesses and introduces new definitions and provisions related to various business entities. It allows qualified small businesses to exclude up to $50,000 of income from both the corporation business tax and the gross income tax, effective for tax periods beginning after December 31, 2024. A "qualified small business" is defined as an independently owned entity with specific criteria, including a revenue cap of $2 million and a maximum of 20 employees, with a majority being state residents. Additionally, the bill specifies that for taxable years starting after December 31, 2024, the S corporation income of these qualified small businesses will not include the first $50,000 of income.

The bill also introduces amendments to the treatment of net operating loss carryovers, stipulating that losses cannot be carried over if incurred during privilege periods ending before July 31, 2019, and outlines conditions under which net operating losses cannot be carried over following ownership changes. Furthermore, it clarifies the tax treatment of various entities, including combinable captive insurance companies and real estate investment trusts, and emphasizes that combined groups will be treated as a single taxpayer for certain tax calculations. Overall, the bill aims to enhance clarity in tax regulations while supporting small business growth and compliance with federal tax laws.

Statutes affected:
Introduced: 54:10A-4, 54A:5-10