This bill introduces a temporary cap of $1 million on net operating loss deductions that taxpayers can claim under the corporation business tax for privilege periods ending between July 31, 2026, and July 31, 2030. It defines "net operating loss deduction" to include various forms of loss carryovers. Taxpayers who are unable to claim the full deduction due to this cap will be allowed to carry forward the unused portion to future privilege periods, specifically allowing them to claim the remaining deduction for periods ending between July 31, 2030, and July 31, 2032, with a limitation that it cannot reduce their allocated entire net income by more than 75%. Additionally, taxpayers can carry over unused deductions for six privilege periods following the period in which the deduction would have expired.

The bill also stipulates that no interest or penalties will be assessed for underpayments of estimated tax installments due between December 31, 2025, and January 1, 2027, if the underpayment results from the limitations imposed by the bill. It does not restrict the surrender or acquisition of corporation business tax benefit certificates related to the New Jersey Emerging Technology and Biotechnology Financial Assistance Program. This legislation aligns with the Governor's Fiscal Year 2027 budget recommendations and is projected to generate an estimated $485 million in additional State General Fund revenues, impacting around 600 taxpayers, which is less than one percent of all corporation business tax filers in New Jersey.