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 up to $50,000 of income from taxation under both the Corporation Business Tax and the Gross Income Tax. A "qualified small business" is defined as an independently owned entity with specific criteria, including a management ownership of at least 51%, gross revenues not exceeding $2 million, and a workforce of no more than 20 employees, with a majority being state residents. The bill also clarifies various tax definitions and provisions, particularly concerning the treatment of dividends, net operating losses, and the structure of combined groups for tax purposes.

Additionally, the bill introduces a tiered approach to the exclusion of dividends based on ownership percentages and privilege periods, with specific rules for net operating losses and the treatment of deferred tax liabilities for combined groups. It emphasizes the importance of timely filing for deductions and outlines the treatment of income for foreign corporations under tax treaties. Overall, the bill aims to create a more predictable tax environment for small businesses while ensuring compliance with existing tax regulations.

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