Insights

= Insights
Article | State and Local Tax

New Jersey Passes Budget, Corporate Tax Bills

On July 3, New Jersey Governor Phil Murphy signed into law a $54.3 billion budget bill, and simultaneously, legislation including changes to the state’s corporate tax regulations.

Among the provisions included in the bills:

  • Adoption of the state’s economic nexus sales tax thresholds—200 or more transactions or receipts of more than $100,000—for income tax purposes. New Jersey becomes the latest state to apply rules for collecting sales tax revenue from out-of-state businesses for income tax purposes in an effort, lawmakers proposed, to provide more certainty to businesses as to when they are subject to income taxes.
  • Changes in New Jersey partnership apportionment for tax purposes from a three-factor method, in which receipts are sourced to the place where a service is performed, to single sales factor with market-based sourcing, where receipts are sourced to a customer’s location
  • Favorable changes to the state’s net operating loss (NOL) provisions include letting businesses use an NOL before taking a dividend-received deduction, which should allow companies to claim a greater amount of NOL in their tax filings
  • A change in combined reporting rules from the Joyce method, which looks at each corporation in a combined group separately when determining if it is subject to tax, to the Finnigan method, where an entire group is taxable if one member is taxable
  • In response to a long-advocated position of New Jersey business groups, an increase the deduction for Global Intangible Low Tax Income (GILTI), which addresses some sources of corporations’ foreign earnings, from 50 to 95 percent
  • A property tax relief program that, staring in 20-26, will provide seniors with less than $500,000 in annual income a credit for half of their property tax bill, up to a maximum of $6,500

    • If you have questions about how the New Jersey budget and tax provisions will affect your business, contact an HBK State and Local Tax (SALT) professional at hbksalt@hbkcpa.com.

    About the Author(s)
    Bryan M. Holm, CPA, MST, Manager, State and Local Tax Bryan Holm is a Manager in the Cherry Hill, NJ office of HBK CPA's and Consultants. He joined the firm in 2021 as a member of the HBK State and Local Tax (SALT) team. His background includes work with top 10 accounting firms. Prior to specializing in state and local taxation, Bryan worked in tax resolution for the Internal Revenue Service. He has served clients in a variety of industries including private equity firms, manufacturing, the restaurant industry, retail, construction, and the banking industry. Bryan has provided a variety of state and local tax services to clients, including; Audit Defense, Refund Reviews, Nexus Reviews, Voluntary Disclosure Agreements, Income/Franchise Tax Compliance, M&A Due Diligence, and SALT Consulting and Advisory Services. Bryan has also been a speaker and writer on state and local tax matters.
    Hill, Barth & King LLC has prepared this material for informational purposes only. Any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or under any state or local tax law or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Please do not hesitate to contact us if you have any questions regarding the matter.

    RECOMMENDED ARTICLES