New Jersey bill favors small businesses
On June 28, 2024, New Jersey lawmakers passed a series of tax-related legislation alongside the state’s $56.6 billion fiscal year 2025 budget.
Key points:
Reinstating the 2.5% tax surcharge on large corporations with over $10 million in taxable net income, retroactive to January 1, 2024, and expiring at the end of 2028. This will give New Jersey the highest corporate income tax rate in the nation at 11.5%.
Allocating $1 billion annually from this tax to fund New Jersey Transit operations starting in fiscal year 2026.
Significant direct property tax relief for homeowners and renters.
Offering $500 million in tax credits for AI companies investing at least $100 million and creating 100 new full-time jobs.
The fiscal year 2025 budget in New Jersey primarily targets large corporations with the reinstated 2.5% tax surcharge on businesses earning over $10 million. Small and medium-sized businesses are not directly impacted by this tax increase. According to the state, nearly 2,500 companies will see their taxes decrease compared to last year.
Additionally, the budget includes measures that could benefit small businesses, such as:
Relaxed employee location requirements: This change allows businesses to qualify for tax breaks with a reduced on-site work requirement from 60% to 40%, reflecting the new normal of remote work.
Expanded tax credit programs: Small businesses in the AI sector and digital media content production could benefit from new and expanded tax credits.
Overall, while the budget imposes higher taxes on large corporations, it includes provisions that could support and potentially reduce the tax burden on small businesses.
Office of the Governor | Governor Murphy Signs Fiscal Year 2025 Budget into Law (nj.gov)
Hagger Tax & Advisory regularly follows New Jersey and other state and local legislative changes. Contact us at (305) 762-9587 to discuss how the recent changes impact your company.
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