The bill amends Section 4 of P.L.1945, c.162 (C.54:10A-4) to provide tax relief for small businesses in New Jersey by allowing them to exclude up to $50,000 of income from taxation under both the gross income tax and the corporation business 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 maximum gross revenue of $2 million and no more than 20 employees, with a majority being state residents. This change aims to support local economic growth and enhance the viability of small businesses in the state.

Additionally, the bill includes various amendments to existing tax definitions and provisions, particularly concerning the treatment of net operating losses (NOLs) and the definitions of corporate entities. It specifies that NOL carryovers will not include losses from periods ending before July 31, 2019, and introduces new terms related to captive insurance and investment companies, which will be taxed similarly to C corporations starting from privilege periods ending on or after July 31, 2023. The bill also clarifies the treatment of S corporation income for qualified small businesses, ensuring that the first $50,000 of income is excluded from taxation, thereby streamlining tax obligations and promoting compliance with state regulations.

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