New Jersey Assembly Bill A1146

New Jersey 2022-2023 Regular Session

• Introduced: 1/11/22
• Refer: 1/11/22

Caption

Gradually reduces CBT rate.

Impact

If passed, this bill will significantly impact how businesses are taxed in New Jersey, particularly benefiting those that generate lower income levels. For instance, businesses earning less than $100,000 will experience an accelerated reduction in their tax rate to 3.5% in the earlier years, presenting a more immediate easing of financial obligations for small enterprises. The adjustments represented in A1146 intend to shift the tax landscape, aiming to incentivize business retention and foster growth within local and state jurisdictions.

Summary

Assembly Bill A1146 proposes a gradual reduction of the Corporation Business Tax (CBT) rate from its current level of 9% down to 2.5% over a span of several years. This legislation aims to reduce the financial burden on businesses operating within New Jersey and stimulate economic growth by enhancing the attractive nature of the state's tax environment. The reduction is scheduled in phases, initiating with a drop to 7% for privilege periods ending in 2021, then reducing to 5% in 2022, followed by 3% in 2023, and finally reaching the target rate of 2.5% thereafter.

Contention

The proposed changes may elicit varied responses from stakeholders. Supporters of A1146 argue it stands to enhance New Jersey’s competitiveness, positioning it more favorably against states with lower tax burdens, which could attract new investments. However, detractors might raise concerns regarding the loss of revenue for the state, questioning whether the projected benefits for the business sector might outweigh the potential financial implications for state budgets and public services. Thus, debates around A1146 will likely focus on balancing economic growth with maintaining adequate state funding.