Division of TaxationAmendments to the Garden State Film and Digital Media Jobs Act
This law amends the Garden State Film and Digital Media Jobs Act under the jurisdiction of the New Jersey Economic Development Authority (NJEDA), as well as portions of the New Jersey Economic Recovery Act of 2020.
It extends the eligibility period of the program by ten years (from on or before July 1, 2039 to on or before July 1, 2049) and extends the timeframe for awarding credits (from prior to Fiscal year 2040 to prior to Fiscal Year 2050). It amends various definitions and eligibility requirements the NJEDA uses to award Garden State Film and Digital Media tax credits, and also changes how the tax certificate (or credit transfer certificate) holder may use the credit.
The law modifies the tax credit recapture provisions stipulating that tax credits can only be recaptured from the initial recipient of the credits, not the purchaser or assignee of the tax credit transfer certificate.
It expands on the definition of “qualified production expenses” to include deferred compensation payments (which individual Income Tax is not withheld), made directly to a labor union on behalf of an individual who performed services on a production.
The law requires the Division to purchase unused tax credits awarded pursuant to the New Jersey Aspire Program Act, the Cultural Arts Incentives Program Act, and the Garden State Film and Digital Media Jobs Act. The Director must purchase credits awarded for 95% of the credit amount for any original application approved by the NJEDA by January 1, 2026 provided that:
It also allows a New Jersey studio partner or New Jersey film-lease production company an additional tax credit of 4% of the qualified film production or digital media expenses incurred during a tax period on or after July 1, 2025, but before July 1, 2049.
Additionally, tax credits allowed in the law shall not exceed an additional amount totaling 5% of the qualified expenses during the tax period mentioned above. The total amount of tax credits allowed pursuant to the Garden State Film and Digital Media Jobs Act shall not exceed an aggregate additional amount totaling 45% of the qualified expenses incurred during a tax year.
Appropriates State and Federal Funds For Fiscal Year 2026 State Budget
This law provides State government budgetary appropriations for Fiscal Year 2026, specifically $2,431,572,000 the ANCHOR Property Tax Relief Program, $239,300,000 for the Property Tax Reimbursement Program, and $280,000,000 for the Stay NJ Property Tax Credit Program. It also specifies for payments are appropriated.
Modifies Tax Rate on Certain Nicotine Products
This law increases the tax on cigarettes from $2.70 per pack of 20 cigarettes to $3.00 per pack, liquid nicotine from $0.10 per fluid milliliter to $0.30 per fluid milliliter; and container e-liquid from 10% to 30% of the listed retail sale price.
Modifies Tax on Certain Forms of Online Gaming and Wagering
This law increases the Internet casino gaming tax, the Internet sports wagering tax, and the daily fantasy sports operating fee to 19.75%.
Amends both the New Jersey Angel Investor Credit Act and the Technology Business Tax Certificate Transfer Program
This law amends both the New Jersey Angel Investor Credit Act and the Technology Business Tax Certificate Transfer Program.
It increases the Angel Investor Tax Credit from 20% of the qualified investment made by the taxpayer to 35%. The higher credit amount of 25% of the qualified investment allowed to the taxpayer (meeting certain requirements) is increased to 40%. The law also decreases the amount of employees the company has from fewer than 225 to fewer than 150.
The credit can be applied against a taxpayer’s Corporation Business Tax liability or Gross Income Tax liability during the privilege period in which it was applied for. The value of credits cannot exceed $500,000 for each qualified investment made.
If the value of transferable tax credits transferred is less than $75,000,000, the New Jersey Economic Development Authority along with the Division, must certify the excess value of transferable tax benefits.
The law also reduces the cumulative total Angel Investor Tax Credits from $35,000,000 to $25,000,000.
Exempts Qualified Capital Gains from Sale or Exchange of Small Business Stock from New Jersey Gross Income
The law states that gross income does not include net gains or income derived from the sale, exchange, or other disposition of qualified small business stock that are also exempt from federal taxation.
Modifies Payer of Fees and Taxes on Certain Real Property Transfers
This law amends the additional fee on certain transfers of real property and imposes the fee on the grantor, where previously it was imposed on the grantee. The law also amends the Controlling Interest Transfer Tax to impose the fee on the seller, where previously it was imposed on the purchaser. A new fee structure has been created for both scenarios.
Expands Property Tax Reimbursement Eligibility
The law allows disabled individuals under age 65 who receive federal Railroad Retirement Disability payments and meet all of the other eligibility requirements to apply for the Property Tax Reimbursement (PTR) program.
Regulates the Production and Sale of Certain Intoxicating Hemp Products
This law modifies the definition of “hemp product” and adds a definition of “total THC” pursuant to the New Jersey Hemp Farming Act. It also amends the New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization (CREAMM) Act to add a definition of “intoxicating hemp product” and “total THC.”
The law imposes Sales Tax and local transfer tax (if imposed by the municipality) on the retail sale of intoxicating hemp beverages.
This bill synchronizes the definitions of hemp, hemp products, and definitions involving total THC concentration to regulate the sale of intoxicating hemp products as a form of cannabis item.
Exempts the Sales of Investment Metal Bullion and Certain Investment Coins from Sales and Use Tax
This law exempts receipts of investment metal bullion and investment coin sales from Sales and Use Tax. “Investment metal bullion” is defined as any elementary precious metal that has been put through a process of smelting or refining. This includes, but is not limited to, gold, silver, platinum, and palladium in a state or condition that its value depends on its contents, not its form. It does not include any precious metal that has been assembled, fabricated, manufactured, or processed for industrial, aesthetic, or artistic use.
“Investment coin” is defined as any numismatic coin manufactured of gold, silver, platinum, palladium, or other metal having fair market value of not less than $1,000, and does not include jewelry or works of art made of coins or commemorative medallions.
Establishes Next New Jersey Program for Artificial Intelligence Investments
This law establishes the “Next New Jersey Program” under the jurisdiction of the New Jersey Economic Development Authority, and modifies certain parts of the “New Jersey Economic Recovery Act of 2020.” Beginning July 25, 2024, through March 1, 2029, a business that is primarily engaged in the artificial intelligence industry may apply to receive tax credit that may be applied against their Corporation Business Tax or Insurance Premium Tax liabilities.
Amends Economic Development Authority Tax Credits for Certain Incentive Programs
The law amends eligibility requirements that the New Jersey Economic Development Authority will use to award tax credits for the Business Retention and Relocation Assistance Act, the Business Employment Incentive Program Act, the Urban Transit Hub Tax Credit Act, and the Grow New Jersey Assistance Act programs.
Amends the Garden State Film and Digital Jobs Act
This law amendment address the treatment of wages paid under reciprocity agreements for the Garden State Film and Digital Media Jobs Act. It expands the definition of “qualified film production expenses” and “qualified digital media content production expenses” to include the treatment of New Jersey wages and salaries paid to Pennsylvania. “Full-time of full-time equivalent employee” was also modified to include Pennsylvania residents working in New Jersey.
Adds a 2.5 percent Corporate Transit Fee under Corporation Business Tax
This law imposes a 2.5 percent Corporate Transit Fee on Corporation Business Tax (CBT) taxpayers with allocated taxable net income in excess of $10 million. The Corporate Transit Fee is in addition to the taxpayer’s regular CBT liability, and taxpayers cannot claim a credit against the fee except for credits for installment payments, estimated payments made with request for an extension of time to file a return, or overpayments from prior privilege periods.
“Allocated taxable net income” means the same as “taxable net income” as defined in the Corporation Business Tax Act for the purpose of this bill.
Phases Out Sales and Use Tax Exemptions on Zero Emission Vehicles and Repeals the Annual Sales Tax Holiday
This law phases out the Sales and Use tax exemption for sales of zero emission vehicles in two phases. Effective October 1, 2024 through June 30, 2025, the Sales Tax rate will be 3.3125 percent. Beginning July 1, 2025, the Sales Tax rate on zero emission vehicles will be imposed at the full statutory rate, currently 6.625 percent.
The law also repeals the annual Sales Tax holiday for the sale of certain school supplies and sport or recreational equipment.
Alternative Method of Depreciation
This law allows taxpayers to utilize an alternative method to calculate a depreciation deduction of eligible expenditures in connection with the construction of new affordable housing developments for Corporation Business Tax and Gross Income Tax.
"Eligible property expenditures" are defined as capital expenditures incurred by the taxpayer in connection with the construction of a new affordable housing development owned by the taxpayer.
Adds Sales and Use Tax Exemption for Affordable Housing Projects
The law amendment provides a sales and use tax exemption for purchases made by contractors or repair persons of materials, supplies, and services for certain affordable housing projects. All units must be for occupants with moderate, low, or very low incomes as defined in the “Fair Housing Act”.
Adds a Property Tax Exemption under the "Fair Housing Act"
The law amends the “Fair Housing Act” to allow projects supported by the “New Jersey Affordable Housing Trust Fund” to be exempt from property tax and to instead contribute to municipal services by making payments in lieu of taxes.
The governing body of a municipality in which a housing project or program is located and awarded a grant or loan from the “New Jersey Affordable Housing Trust Fund” is exempt from property taxes if the housing sponsor enters into an agreement with the municipality for payments in lieu of taxes (PILOT) for municipal services.
The law also allows the governing body of a municipality to negotiate a PILOT agreement with a housing sponsor whose project is funded through municipal housing development fees.
The tax exemption cannot extend past the date on which the eligible loan made for the project is paid in full. However, the municipality may agree to continue a tax exemption beyond the date the loan is paid in full if the project remains subject to specific affordability controls outlined in the law.
Revises "New Jersey Transportation Trust Fund Authority Act" and Calculation of Gas Tax Rate
Beginning Fiscal Year 2025, the law increases the highway fuel cap annually through fiscal year 2029. It also changes the date from August 15 to November 15 by which the State Treasurer and the Legislative Budget and Finance Officer must determine the total revenue derived from the taxes collected in the prior State fiscal year.
Amends the New Jersey Urban Enterprise Zones Act in Relation to Cannabis Sales
The law clarifies that the retail sale of recreational cannabis and cannabis products sold in Urban Enterprise Zones (UEZs) are subject to the full sales tax rate. The law also requires that tax revenues resulting from the sale of recreational cannabis and cannabis products in a UEZ be credited to the Cannabis Regulatory, Enforcement Assistance, and Market Place Modernization (CREAMM) Fund.
Requires Vital Document Translations and Interpretive Services
The law requires that within 12 months of the law’s effective date, State agencies must provide vital document translations and interpretive services in the five most common non-English languages spoken in New Jersey and within 23 months of the law’s effective date for the additional two most common languages. Each State agency in the Executive Branch that provides direct services to the public will designate an employee to serve as a language access coordinator to oversee the development and implementation of the entity’s language access plan, which will be posted on the agency’s website, that reflects how the agency will comply with the provisions of the law.
Modernizes Business Filing Statutes to Include Entity Conversion and Domestication
The law modifies applicable business filing statutes in the "New Jersey Business Corporation Act." It establishes domestication provisions for foreign corporations and conversion provisions for New Jersey corporations.
It establishes domestication requirements for a foreign corporation to file an application to convert to a domestic corporation to be domiciled in New Jersey. The application will be reviewed by the Division of Revenue and Enterprise Services (DORES).
The law also provides domestic corporations the ability to file an application with DORES to convert to "other entities." Other entities are classified as partnerships, limited liability companies, statutory trusts, business trusts or associations, real estate investment trusts, common law trusts, national associations, or any other unincorporated businesses.
Conversions are not deemed to constitute a dissolution of the other entity and conversions may not take place without the entity's board of directors adopting and approving a plan of conversion under the provided provisions.
Additionally, if the entity is organized, formed, or created under laws of a jurisdiction other than New Jersey, but does business in New Jersey, DORES will notify the corporation that converted out of the State to comply within the provisions of the New Jersey Business Corporation Act.
Convenience of the Employer Sourcing Rule Enacted for Gross Income Tax
P.L.2023, c.125 was enacted on July 21, 2023 and establishes a “convenience of the employer test” (convenience rule) for nonresident income sourcing.
The new law only applies to employees who are residents of states that also impose a similar test, such as Alabama, Delaware, Nebraska, and New York. Note that this list may change accordingly based on the laws of different states.
This legislation does not apply to Pennsylvania residents who work in New Jersey, since there is a Reciprocal Agreement in place with that state. Further, the convenience of employer sourcing rule also does not apply to Connecticut residents who work in New Jersey, based on New Jersey’s understanding that the similar Connecticut convenience rule does not apply to New Jersey residents who work in Connecticut. The Division intends to coordinate with the Connecticut Department of Revenue Services and issue further guidance for clarification.
Under the convenience rule, a nonresident taxpayer’s employee compensation from a New Jersey employer for the performance of personal services is sourced to the employer’s location (New Jersey) if the employee is working from an out-of-state location (e.g. at home in their resident state) for their own convenience rather than for the necessity of their employer.
In determining whether compensation earned by a nonresident telecommuting for a New Jersey employer will be deemed New Jersey sourced income, New Jersey will apply a similar rule which would be the same as the triggering state’s rule. For example, compensation earned by a New York resident telecommuting for a New Jersey employer will be deemed New Jersey sourced income by applying the New York “convenience of the employer” test.
The new law is retroactive to January 1, 2023. Affected taxpayers must begin withholdings and/or making estimated payments for tax year 2023 as soon as possible and are required to have proper tax paid by April 15, 2024. Employers should consider making adjustments to withholdings as an accommodation to employees, so that they are not underpaid. The Division will not impose penalty and interest, as long as the taxpayer begins complying with the new law as of September 15, 2023.
Revisions to New Jersey Aspire Program
The law revises provisions of the “New Jersey Economic Recovery Act of 2020,” specifically the New Jersey Aspire Program. It amends both the definitions and eligibility requirements that the New Jersey Economic Development Authority uses to award Aspire Credits. The law allows New Jersey Aspire Program tax certificate holders to transfer the tax credit to another recipient. The new recipient must use the tax credit within the period for which it was originally issued. The new certificate holder may also carry forward the tax credit amount over five successive tax periods.
Property Tax Relief
Establishes Stay NJ program; increases ANCHOR by $250 for senior citizens, increases Senior Freeze income eligibility to $150,000.
The law revises provisions of the Garden State Film and Digital Media Jobs Act. This legislation amends:
Retaining Senior Freeze Eligibility if Claimant Exceeds Income Limit
The law allows a taxpayer to retain their base year when their income exceeds the limit for the application year on a one-time-basis. As long as the claimant's income in the succeeding tax year, and any other subsequent year, does not exceed the income limit again, they will not have to establish a new base year. Although the claimant may retain their base year, they will be ineligible for reimbursement in the year that their income exceeds the limit.
Child Tax Credit Increase
This law doubles the amount of the child tax credit currently provided to certain resident taxpayers with children age 5 years and younger at the end of the taxable year. The credit is determined as follows for each qualifying dependent child:
| If the taxable income is: | The credit per child is: |
|---|---|
| $30,000 or less | $1,000 |
| Over $30,000 but not over $40,000 | $800 |
| Over $40,000 but not over $50,000 | $600 |
| Over $50,000 but not over $60,000 | $400 |
| Over $60,000 but not over $80,000 | $200 |
Cannabis Licensee Business Deductions
This law allows New Jersey cannabis licensees, including S corporations, to deduct from their New Jersey gross income an amount equal to any expenditure that is eligible to be claimed as a federal income tax deduction, without regard to section 280E of the Internal Revenue Code (26 U.S.C. s.280E). Net profits and distributive share of partnership income calculated for New Jersey gross income purposes also shall be determined without regard to section 280E. The decoupling of New Jersey tax provisions from section 280E applies only to cannabis licensees.
The law also allows cannabis licensees to deduct an amount equal to any expenditure that would qualify as a specified research or experimental expenditure pursuant to section 174 of the Internal Revenue Code but is disallowed as a deduction for federal tax purposes because cannabis is a controlled substance under federal law. These expenditures also may be claimed as a qualified research expense for purposes of the credit allowed pursuant to section 1 of P.L. 1993, c.175 (C.54:10A-5.24).
Two New Tax Credits for Gross Income Tax (GIT) and Corporation Business Tax (CBT)
This law provides two new tax credits for Gross Income Tax (GIT) and Corporation Business Tax (CBT) for certain deliveries of low carbon concrete in a contract with a State agency, and for costs of conducting environmental product declaration analyses of low carbon concrete.
One tax credit is for concrete producers that deliver the specified concrete for use by a construction or improvement project requiring a purchase of 50 cubic yards of concrete or more. The delivery must be pursuant to a contract with a State procuring agency or a private contracting firm that has contracted with the State. The State agency using the concrete will determine the taxpayer's eligibility and credit amount, and will notify the Division of such.
The other tax credit is for concrete producers/producers of a major component of concrete or aggregate for completing an environmental product declaration analysis of the global warming potential of the concrete product at a production facility owned by the taxpayer. The Department of Environmental Protection (DEP) will determine the taxpayer's eligibility and credit amount, and will notify the Division of such.
Credits cannot reduce the amount of tax below the statutory minimum (CBT) or the taxpayer's liability below zero (GIT). Unused credits for either tax may be carried forward for up to seven tax years.
The Division will issue the tax credit certificate on a first-come, first-served basis. The Division cannot issue more than $10 million in credits per year or allow more than $1 million to any taxpayer per privilege period.
New Requirements for Partnerships
This law requires partnerships to report any IRS audit adjustments to the Division of Taxation. Partnerships will not be collectively subject to the tax imposed by the Gross Income Tax Act based on the federal audit adjustments. Individual partners or members will be taxed on their portion of partnership income or gain.
The partnership can elect to pay the Gross Income Tax on behalf of the individual partners or members. During a pending IRS audit report, all required estimated tax payments must be reported to the Division prior to the due date of the Federal Adjustments Report.
Partnership members are still subject to additional taxes and interest due if the partnership fails to report the IRS audit adjustments. The Division will use available resources to access unreported IRS audit adjustments, and the taxpayer must claim all State refunds, credits, or extensions as a result of the IRS audit within one year of the date of the adjustment report.
Expiration of COVID-Related Extension
The law ends COVID-19 related extensions for the Division to pay interest on refunds, and the statute of limitations to assess taxes.
Elimination of the New Jersey S Corporation Elections
The law eliminates the requirement for recognized federal S corporations to make a separate S corporation election with New Jersey. Federal S corporations will be automatically recognized as an S corporation by New Jersey unless the corporation opts out. To opt out, 100 percent of the shareholders must consent. The entity may opt out at any time during the tax year or at any time on or before the due date or extended due date of the S corporation return.
Any S corporation doing business, having or exercising its franchise, deriving receipts, engaging in contracts, or employing or owning capital or property, or registered to do business in New Jersey that does not elect to opt out will be taxed as a New Jersey S corporation.
This law excludes from New Jersey Gross Income Tax the cancellation of a disabled veteran's student loan debt. Cancellation of debt income already is not subject to New Jersey Gross Income Tax. This legislation codifies this treatment as it applies specifically to certain federal student loan debt held by disabled veterans.
The law amends the effective date of the Child Tax Credit, making it available for Tax Year 2022.
This law amends a statute (N.J.S.A. 17:11D-1 et seq.) regarding tax refund anticipation checks and loan practices. The amendment prohibits tax preparers from requiring clients to enter into a refund anticipation check agreement in order to complete a tax return. It also forbids preparers from using language that would lead the taxpayer to believe that the refund anticipation loan or check is provided at no cost. Additionally, tax preparers must provide a statement itemizing all service charges or fees for issuing a refund anticipation check, including any estimated interest to be paid in the event a refund is delayed.
This law eliminates the Sales and Use Tax exemption for sign installations that result in a capital improvement. Sign fabricators and installation contractors can purchase signs or materials used to fabricate or install signs without paying Sales Tax if they issue a fully completed resale certificate to the seller. However, they must charge their customers Sales Tax on the sales price of the sign.
The law creates a refundable child tax credit for resident taxpayers with taxable incomes of $80,000 or less. This credit is available for all filing statuses except married filing separate. The taxable income ranges and credit amounts are the same, regardless of filing status. For each dependent child who was age 5 or younger at the end of the tax year, the credit is determined as follows:
| If the taxable income is: | The credit is: |
|---|---|
| $30,000 or less | $500 |
| Over $30,000 but not over $40,000 | $400 |
| Over $40,000 but not over $50,000 | $300 |
| Over $50,000 but not over $60,000 | $200 |
| Over $60,000 but not over $80,000 | $100 |
This law allows economic incentives for certain cannabis businesses. It amends the definition of state or local economic incentives and outlines what is not considered a state or local financial incentive. Under previous law, cannabis businesses were excluded from receiving those incentives. In addition, the law defines 'small business.'
The law exempts compensation for services performed by a member of a district board of elections from Gross Income Tax, including any compensation paid to an election officer during an early voting period (pursuant to N.J.S.A. 19:15A-1(d)).
The law revises certain provisions of the Food Desert Relief Program administered by the New Jersey Economic Development Authority (NJEDA). Credits issued under the program now may be applied against Insurance Premium Tax liabilities, in addition to Corporation Business Tax liabilities. The law also adds a seven-year carryforward provision for credits sold by the NJEDA to eligible businesses.
Additionally, taxpayers can apply to the Division of Taxation and the NJEDA for a tax credit transfer certificate. This allows the taxpayer to sell the credit for no less than $25,000 during the privilege period in which they receive the certificate. A taxpayer may not sell the certificate, or use it as collateral, for less than 85% of the credit amount. Credits purchased may be carried forward for 10 privilege periods and cannot reduce tax liability below the statutory minimum tax.
The law establishes the New Jersey Easy Enrollment Health Insurance Program within the Department of Banking and Insurance (DOBI). The law creates a State-based reporting system to provide a taxpayer's insurance status using tax return information and unemployment records maintained by the Department of Labor and Workforce Development.
The law allows individuals who indicate they do not have minimum essential health insurance coverage to choose the option of having DOBI determine if the individual and others in the household are eligible for insurance affordability assistance.
The law expands an allowance for developers to carry forward unused tax credits for up to seven privilege periods under the New Jersey Aspire Program. The law also removes a requirement that the New Jersey Economic Development Authority must approve the credit.
The law authorizes a Sales and Use Tax exemption for certain purchases made by certain supermarkets and grocery stores located within Urban Enterprise Zones. The law clarifies that the $100,000 exempt purchase limitation imposed on UZ-4/UZ-5 holders is an annual limitation. In addition, the law allows unlimited exempt purchases by supermarkets or grocery stores within Urban Enterprise Zones if they receive an annual certification from the State Department of Community Affairs.
The Annual Sales and Use Tax Holiday establishes a 10-day New Jersey Sales Tax exemption period for the following retail purchases:
Business activities with Russia or Belarus are to be suspended immediately. The Department of the Treasury is now required by law to create a list identifying all businesses and individuals engaged in "prohibited activities in Russia or Belarus". Any person identified on the list is ineligible to apply for or receive a tax clearance, among other incentives.
The Garden State Film and Digital Media Jobs Act has been expanded to allow an increase to the digital media content production tax credit. The law also increases and extends the diversity plan credit to July 1, 2034.
The Pass-Through Business Alternative Income Tax (PTE-BAIT) law is amended. The law amends the definitions of "direct share of the tax paid" and "distributive proceeds" for New Jersey resident members and specifies which taxes or fees the PTE-BAIT credit may be used against. In addition, a partnership is no longer required to make a payment of tax on behalf of a non-resident partner if the partner reasonably expects a refund due to the PTE-BAIT credit.
The Casino Hotel Room Occupancy Surcharge Act imposes a surcharge at the rate of $2 per day for each occupied room. Rooms used as a place of assembly, in a casino hotel, are exempt.
The Income Tax Child and Dependent Care Credit expands to include resident taxpayers with New Jersey taxable income of $150,000 or less, increases the percentage allowed, eliminates the previous maximum credit amounts, and makes the credit refundable.
The purchase and use of unit concrete products that utilize carbon footprint-reducing technology is exempt from New Jersey Sales and Use Tax and may provide a Corporation or Gross Income Tax Credit.
Taxpayers can now make contributions to the Special Olympics New Jersey Fund on New Jersey resident and nonresident Income Tax returns.
The Garden State Growth Zone property tax exemption program now allows additional municipalities to opt-in to the program if they meet the new State requirements.
The law extends the sale and use tax exemption on energy to certain recycled materials manufacturing facilities.
A law extending the Urban Enterprise Zone (UEZ) program for 10 years, prohibiting the creation of new zones, limiting sales tax exempt purchases made by UEZ businesses, and eliminating employee tax credits for new applicants.
The Dual-Use Solar Energy Program creates a pilot program for the placement of solar generation on unpreserved farmland and authorizes continued assessment of that farmland at agricultural values for property tax purposes. The Board of Public Utilities will establish rules and regulations for a permanent program.
A law modifying Property Tax assessments provides several amendments to the inspections for reassessment and appeals procedures for counties operating under the alternate assessment calendar.
New Jersey EITC expansion law allows taxpayers who are at least 18 years of age or older without a qualifying child to qualify for modified benefit. The law also removes the maximum age requirement allowing residents who are 65 or older without a qualifying child to be eligible.
Legislation authorizing new income limits for the pension and other retirement income exclusion provides a partial pension and other retirement income exclusion for taxpayers with incomes between $100,000 and $150,000 who were previously ineligible for these exclusions.
The New Jersey College Affordability Act creates three new income tax deductions for taxpayers with gross income of $200,000 or less. Taxpayers can deduct $10,000 of contributions made into the New Jersey Better Educational Savings Trust (NJBEST), up to $2,500 of principal and interest paid on student loans under the New Jersey College Loans to Assist State Students (NJCLASS), and up to $10,000 of tuition paid to an in-state higher learning institution for enrollment or attendance.
Loans that are forgiven under the rules governing the federal Paycheck Protection Program are excluded from gross income under the New Jersey Gross Income Tax Act. The law also allows a deduction for gross income tax and corporation business tax filers for ordinary and necessary business expenses that were paid for with the proceeds of a Paycheck Protection Program loan. The deduction is available even if the loan was forgiven or not included in income.
The New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act legalizes and taxes the sale of recreational cannabis, and decriminalizes the possession of small amounts of marijuana and hashish possession; removes marijuana as a Schedule I drug.
The New Jersey Economic Recovery Act of 2020 creates or amends a variety of tax credits and authorizes how credits are transferred or sold.
The Economic Redevelopment and Growth Grant Program extension extends document submission deadlines for the Urban Transit Hub Tax Credit program and Economic Redevelopment and Growth Grant Program.
Various Corporation Business Tax revisions, clarifications, and corrections.
The Revised Corporation Business Tax Surtax Act imposes a surtax in addition to the tax paid by each taxpayer as determined pursuant to section 5 of P.L.1945, c. 162 (C.53:10A-5). Any business, except a public utility, that has allocated taxable net income in excess of $1 million for the privilege periods, beginning on or after January 1, 2018 through December 31, 2023, the surtax imposed is 2.5% provided, however, that if the federal corporate income tax rate imposed pursuant to section 11 of the Federal Internal Revenue Code of 1986 (26 U.S.C. s.11) is increased to a rate of at least 35% of taxable income, the imposition of the surtax imposed pursuant to this law will be suspended following the conclusion of a taxpayer's privilege period corresponding with the increase to the federal corporate income tax rate.
The Director of Taxation will waive all penalties incurred by a taxpayer because of the retroactive imposition of an increased surtax rate pursuant to P.L.2020, Chapter 95.
The Gross Income Tax Rate increases to 10.75 percent for taxable income over $1 million but less than $5 million for Tax Years beginning on or after January 1, 2020. The law requires employers who pay wages over $1 million, but not over $5 million, to withhold tax at a rate of 21.3% beginning no later than November 1, 2020, for the remainder of 2020.
The law also authorizes a tax rebate, subject to appropriation by the Legislature, beginning in Tax Year 2020 for qualified taxpayers. The rebate will be $500, or an amount equal to the amount of tax paid after credits, whichever is less, pursuant to N.J.S.A. 54A:1-1 et seq. The Division will issue rebates to qualified taxpayers between July 1 and July 31 of the subsequent Tax Year. Qualified taxpayers who are granted an extension to file their return may be issued a rebate between July 1 and December 31 of the subsequent Tax Year.
The Expansion of the New Jersey Earned Income Tax Credit Program (NJEITC) expands the eligibility of the NJEITC to resident taxpayers who are at least 21 years old without a qualifying child. The New Jersey tax credit calculation for these taxpayers is predicated on the maximum federal amount for taxpayers with no qualifying child.
New Jersey Gross Income Tax Exclusion of Combat Zone Compensation excludes from New Jersey Gross Income Tax any amount received as combat zone compensation by members of the Armed Forces of the United States that is excluded from federal taxable income pursuant to section 112 of the Federal Internal Revenue Code of 1986 (26 U.S.C. s.112).
An Act concerning the delivery and sale of alcoholic beverages during a declared state of emergency temporarily permits manufacturers and licensees to sell and deliver alcoholic beverages. The Alcoholic Beverage Control must publish a website notice to notify licensees of certain tax exemptions, for example, the sale or delivery of alcohol used in the production of hand sanitizer during a state of emergency. A license holder must submit to the Division of Taxation satisfactory evidence of such sale, delivery, and intended use of the alcohol for exempt preparations.
The "COVID-19 Fiscal Mitigation Act" clarifies the filing and payment deadline for Corporation Business Tax and Gross Income Tax filers, modifies both the duration of State Fiscal Years 2020 and 2021 and the Division's responsibilities for payment of interest of refunds, and requires the Treasurer to prepare a report on the financial condition of the budget for Fiscal Years 2020 and 2021.
P.L. 2019, Chapter 7 – This law, which was enacted and became effective on January 31, 2019, excludes certain out-of-State businesses and employees from certain taxes, fees, and business registration requirements when temporarily working in New Jersey during a declared disaster or emergency.
An out-of-State business that restores critical infrastructure during a declared disaster is not required to register, file, report and pay State or local taxes or fees that require the filing of a New Jersey tax return. Out-of-State employees, or their employers, are not required to report and pay State or local income taxes. However, when out-of-State businesses or employees purchase goods and services used in New Jersey, they must pay all associated taxes and fees. Examples of these taxes and fees are fuel taxes, Sales and Use Tax, occupancy taxes and fees, and motor vehicle rental taxes and fees.
An out-of-State business or employee that remains in New Jersey after the disaster period ends is subject to the State’s normal standards for establishing physical presence and doing business in this State. The business or employee will be responsible for any State or local tax liabilities or requirements to do business in this State.
P.L. 2019, Chapter 145 - This law increases the amount of Corporation Business Tax and Gross Income Tax credits available to investors in a New Jersey emerging technology business or emerging technology business holding company under the “New Jersey Angel Investor Tax Credit Act.” This law took effect June 30, 2019 and applies to qualified investments made during privilege periods and tax years beginning on and after January 1, 2020.
P.L. 2019, Chapter 146 - This law increases the Gross Income Tax deduction available to Veterans from $3,000 to $6,000 and is in addition to the $1,000 personal exemption to which each taxpayer is entitled, and any additional exemption for which the veteran is eligible. The law became effective June 30, 2019 and applies to tax years beginning on and after January 1, 2019.
P.L. 2019, Chapter 147- This law, known as the “Tobacco and Vapor Products Tax Act,” imposes licensing requirements on vapor business, limits the sale of container e-liquid to vapor businesses, and imposes a 10% tax on the sale of container e-liquid. This law will take effect November 1, 2019.
P.L. 2019, Chapter 149- This law assists inactive or revoked status business entities achieve reinstatement, or execute a streamlined termination, by filing a single application and supporting documentation along with a $500 administrative fee. This is for a temporary period not to exceed 180 days and to end no later than June 15, 2020. The law also eliminates the reinstatement fee for late filing, establishes a grace period for waiver of the tax clearance requirement for recently revoked entities, and establishes a uniform tax clearance procedure for all for-profit entities following the grace period. In addition, the annual report fee for for-profit entities has been increased by $25 to $75 and the fee for non-profit entities has been increased by $5 to $30. This law became effective June 30, 2019.
P.L. 2019, Chapter 186- This law requires property tax bills to contain eligibility information on State tax relief programs. This law became effective on July 19, 2019 and is applicable to tax bills printed 60 days after the effective date, July 19, 2019.
P.L. 2019, Chapter 203 – This law extends the veteran’s property tax deduction to residents of continuing care retirement communities. This law became August 5, 2019; however it will remain inoperative until approved by voters via constitutional amendment.
P.L. 2019, Chapter 235- This law excludes any accommodation not obtained through a transient space marketplace from transient accommodation taxes and fees, unless it is a professionally managed unit. A transient space marketplace is defined as the payment for the accommodation is made through a means provided by the marketplace or travel agency, either directly or indirectly, regardless of which person or entity receives the payment, and where the contracting for the accommodation is made through the marketplace or travel agency. This law became effective on August 9, 2019.
P.L. 2019, Chapter 295 - This law allows for voluntary contributions by taxpayers on Gross Income Tax returns to support a special fund known as the “Meals on Wheels in New Jersey Fund.” Effective immediately, this law is applicable for tax years beginning on or after January 1, 2021.
P.L. 2019, Chapter 297 - This law allows a municipality to extend long term property tax exemptions to qualified low-income housing projects. A project that receives a New Jersey or federal rent subsidy from its inception may retain an existing property tax exemption if the municipality agrees. This law became effective on January 13, 2020.
P.L. 2019, Chapter 396 - This law prohibits the use of coupons, price rebates, and price reduction promotions in the sale of tobacco and vapor products. This law is effective March 1, 2020.
P.L. 2019, Chapter 413 - This law extends the veterans’ property tax exemption for 100% service-disabled veterans and the $250 veterans’ property tax deduction to New Jersey veterans who were honorably discharged or released under honorable circumstances, but did not serve in a time of war. This law became effective January 21, 2020. However, the law remains inoperative until voters approve a constitutional amendment authorizing the aforementioned law.
P.L. 2019, Chapter 417 - This law provides a business or group of businesses with a $5,000 Corporation Business Tax or Gross Income Tax credit for associated start-up costs regarding apprenticeship programs registered with the United States Department of Labor, starting on or after July 1, 2019. This law became effective January 21, 2020.
P.L. 2019, Chapter 425 - This law prohibits the sale, offer for sale, and distribution of electronic smoking devices and related products that have a characterizing flavor. This law is effective April 21, 2020.
P.L. 2019, Chapter 437 - This law exempts from Sales and Use Tax the sale or use of energy utility service to qualified recovered materials manufacturing facilities. Effective January 21, 2020, this law is applicable to Sale and Use Tax receipts made on or after January 21, 2020.
P.L. 2019, Chapter 444 - This law, known as “Lindsay’s Law,” allows for up to a $10,000.00 tax deduction from Gross Income Tax for unreimbursed expenses incurred due to an individual’s, or their dependent’s, organ or bone marrow donation. This law is effective May 21, 2020.
P.L. 2019, Chapter 491 - This law defers property tax payments for a taxpayer who is a federal employee furloughed or working without pay due to a federal budget impasse. Interest charges will be waived for delinquent property taxes. This law is retroactive to December 22, 2018.
P.L. 2019, Chapter 506 - This law extends the availability period for tax credits for certain expenses incurred for production of certain film and digital media content, raises annual cap related to film production, and provides for annual administration of film tax credits. This law became effective January 21, 2020.
P.L. 2018, Chapter 19 – This law, signed on May 31, 2018, became effective immediately. It reinstates expired Urban Enterprise Zones (UEZ) until December 31, 2023, and extends the expiration deadline on all UEZs scheduled to expire to December 31, 2023.
P.L. 2018, Chapter 31 – This law, signed on May 31, 2018, will become effective January 1, 2019. It establishes the New Jersey Health Insurance Market Preservation Act which creates a State Shared Responsibility Tax to encourage residents to sign up for health insurance. The Shared Responsibility Tax takes effect in the 2019 tax year. The Affordable Care Act created a federal tax that will not be levied after the 2018 tax year. The State tax is designed to prevent erosion of health insurance markets once the federal tax expires.
P.L. 2018, Chapter 45 – This law took effect immediately and applies to tax years beginning on and after January 1, 2018. It effectively:
Below is a brief description of each section of the law.
Earned Income Tax Credit:
Qualified taxpayers were eligible for a New Jersey Earned Income Tax Credit equal to 35% of their federal Earned Income Credit. This law increased the percentage to 37% for the taxable year beginning on or after January 1, 2018, but before January 1, 2019. In taxable years beginning on or after January 1, 2019, but before January 1, 2020, the percentage will increase to 39%. The credit increases to 40% for taxable years beginning on or after January 1, 2020.
Child and Dependent Care Expenses:
Eligible resident taxpayers with New Jersey taxable income of $60,000 or less who receive the federal Child and Dependent Care Credit will be granted a Gross Income Tax credit. The credit is nonrefundable, meaning it will offset the tax due but cannot reduce the tax below $0.
The New Jersey credit is a percentage of the federal credit that the taxpayer receives for the taxable year and is based on their New Jersey taxable income:
| NJ taxable income is: | Amount of NJ Credit is: |
|---|---|
| Not over $20,000 | 50% of federal credit |
| Over $20,000 but not over $30,000 | 40% of federal credit |
| Over $30,000 but not over $40,000 | 30% of federal credit |
| Over $40,000 but not over $50,000 | 20% of federal credit |
| Over $50,000 but not over $60,000 | 10% of federal credit |
Income Tax Rate Increase:
As of January 1, 2018, individual income of more than $5 million is taxed at 10.75%, regardless of the taxpayer’s filing status. Beginning as soon as possible, but no later than September 1, 2018, employers must withhold Gross Income Tax at the rate of 15.6% from salaries, wages, and other remuneration paid for services rendered in excess of $5 million during the taxable year. This higher withholding rate allows taxpayers affected by the rate increase to “catch up” on their withholdings for the year since the new tax rate is retroactive to January 1.
The Division of Taxation won’t impose interest or penalties for insufficient payment of estimated tax and/or withholdings that may otherwise be due before September 1, 2018, if the insufficiency is a result of the new tax rate.
Carried Interest Surtax:
In addition to the above, the law also provides for the taxation of certain investment management services. The provisions of this portion of the law will take effect after the states of Connecticut, New York, and Massachusetts enact related legislation.
P.L. 2018, Chapter 46 – This law requires the Director of the Division of Taxation to establish a 90-day State tax amnesty period that ends no later than January 15, 2019. It was signed into law on July 1, 2018, and became effective immediately.
During the State tax amnesty period, taxpayers can file and pay any tax liability that was due on or after February 1, 2009, but before September 1, 2017. Amnesty participants can pay the tax as well as half of the interest due without late payment or late filing penalties, and won’t be charged a cost of collection fee, delinquency penalty, or recovery fee. Any taxpayer who makes full payment of the tax and half the interest due as of November 1, 2018, will not be responsible for the remaining half of the assessed interest.
All taxpayers with State tax return delinquencies and/or deficiencies are eligible to participate with the exception of those that are under criminal investigation or have been charged with any State tax matter.
P.L. 2018, Chapter 47 – This law was effective immediately, with the exception of Section 4, which takes effect on October 1, 2018. A surcharge of 50 cents will be imposed on a transportation network company rider for every pre-arranged ride that begins and ends in New Jersey. If the ride is a shared ride, then the surcharge for each rider will be 25 cents.
P.L. 2018, Chapter 50 – This law imposes a 10 cents per fluid milliliter tax related to sales of liquid nicotine. It was signed into law on July 1, 2018, and will become effective on September 29, 2018.
P.L. 2018, Chapter 52 – This law is effective immediately, but the assessment will not take effect until August 1, 2018. The Meadowlands Regional Hotel-Use Assessment will be applied on rent for the occupancy of every room in every hotel located outside of the Meadowlands district, but within a constituent municipality, including any hotels located on land owned by the State. Constituent municipalities include: Carlstadt, East Rutherford, Little Ferry, Lyndhurst, Moonachie, North Arlington, Ridgefield, Rutherford, South Hackensack, and Teterboro in Bergen County; and Jersey City, Kearny, North Bergen, and Secaucus in Hudson County.
P.L. 2018, Chapter 56 – This law, effective immediately, provides Corporation Business Tax and Gross Income Tax credits for certain expenses incurred during production of certain films and digital media content.
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