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 the exclusion of certain small business income from both the gross income tax and the corporation business tax. It defines key terms related to taxation and specifies the calculation of net worth and entire net income, including a provision for the exclusion of 100% of dividends received from subsidiaries owned 80% or more, applicable for privilege periods beginning on or before December 31, 2016. The bill also introduces a tiered exclusion for dividends based on ownership percentage, with a gradual reduction for periods starting after that date, and reinstates a 100% exclusion from July 31, 2023.

Additionally, the bill establishes new deductions for cannabis licensees and qualified small businesses, allowing the latter to exclude up to $50,000 from their entire net income for privilege periods beginning after December 31, 2024. A "qualified small business" is defined with specific criteria, including revenue limits and employee counts. The bill also clarifies the treatment of net operating losses, particularly in cases of ownership changes, and introduces new definitions for various business entities. Overall, the legislation aims to refine the tax framework for small businesses and specific sectors, promoting economic growth while ensuring compliance with existing tax regulations.

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