New Jersey Assembly Bill A3102

New Jersey 2022-2023 Regular Session

• Introduced: 3/7/22
• Refer: 3/7/22

Caption

Allows taxpayers to deduct cost of certain depreciable assets under corporation business and gross income taxes.

Impact

The passage of A3102 is anticipated to facilitate economic growth in New Jersey by easing the tax burden on small businesses. By allowing these businesses to deduct costs directly in the year the assets are placed into service, the bill aims to enhance cash flow and enable investments in future growth. This re-linking of state tax law with federal tax provisions is seen as a move that could attract and retain businesses within New Jersey, aligning state practices more closely with more favorable federal tax rules.

Summary

Assembly Bill A3102 proposes significant modifications to New Jersey's Corporation Business Tax (CBT) and the Gross Income Tax (GIT). The core aim of the bill is to allow taxpayers the option to expense the costs of certain depreciable business assets placed in service on or after January 1, 2020. This aligns with the provisions of Section 179 of the federal Internal Revenue Code, which permits businesses to deduct the full purchase price of qualifying assets instead of depreciating them over time. Such provisions are seen as beneficial for small businesses that may be unable to bear the burden of significant upfront costs.

Contention

However, this bill has been met with some points of contention. Critics raise concerns about the fiscal implications for state revenue, suggesting that increasing deductions could lead to a significant reduction in tax income for the state. There are debates surrounding whether such tax relief measures disproportionately benefit larger corporations that can afford to make substantial investments in depreciable assets, while small entities, which the bill aims to assist, might not see comparable benefits. Additionally, the need for clear regulations and guidance on implementing these new provisions is emphasized, as businesses may require support to navigate the revised tax landscape effectively.