This bill modifies the eligibility criteria for the alternative business calculation adjustment under New Jersey's gross income tax. It allows taxpayers who incur a net loss in specific categories of gross income to offset that loss against other gains or losses, thereby determining their alternative business income or loss. Additionally, the bill permits taxpayers to carry forward any alternative business losses for up to 20 taxable years. The bill also outlines a phased approach for the deduction of the business increment from taxable income, starting with a 10% deduction for taxable years beginning in 2012 and increasing to 50% for taxable years beginning in 2016 and ending in 2025.

Beginning in 2026, the bill introduces income limits for the deduction, allowing taxpayers with gross income of $500,000 or less to continue deducting 50% of their business increment. Taxpayers with gross income between $500,000 and $1 million will be able to deduct only 25%, while those with gross income exceeding $1 million will not be eligible for any deduction. This change is expected to generate an estimated $120 million in additional state revenue annually and will impact around 10,000 taxpayers, which is less than 1% of all gross income tax filers.

Statutes affected:
Introduced: 54A:3-9