Provides small businesses with gross income tax or corporation business tax deduction for wages paid to minimum wage employees.
The legislation targets small businesses, defined as those with an average of 100 or fewer full-time employees. By providing this tax relief, the bill aims to ease financial pressure on these businesses, especially as they navigate operational challenges related to minimum wage requirements. The financial benefit would allow businesses to allocate resources more efficiently and potentially hire more staff or increase employee hours. However, the bill does not apply to businesses with over 100 employees, reflecting an intent to protect smaller entities that may be more vulnerable to economic fluctuations.
Assembly Bill A153 proposes a tax incentive for small businesses in New Jersey by allowing them to deduct wages paid to minimum wage employees from their gross income or corporation business tax. This deduction is applicable for tax years beginning on or after January 1, 2019, and extending through December 31, 2028. The bill is designed to support small businesses, enabling them to reduce their overall tax burden while complying with state minimum wage laws. This approach is intended to promote employment and growth within the small business sector, particularly in a challenging economic climate.
During discussions surrounding A153, proponents highlighted the necessity of supporting small businesses, particularly during economic downturns when margins are often tight. Critics have raised concerns that while the tax deduction may offer temporary relief, it could also be considered inadequate for the more significant systemic challenges faced by small businesses. Furthermore, questions have been raised about the long-term implications of such deductions on state tax revenue, especially with no provisions for offsetting potential losses.