New Jersey Assembly Bill A3038

New Jersey 2022-2023 Regular Session

• Introduced: 2/28/22
• Refer: 2/28/22

Caption

Allows carryforward of certain losses under New Jersey gross income tax.

Impact

If enacted, A3038 will provide significant tax relief for individuals who incur substantial losses on their investments, such as those incurred from the sale of stocks or other property. By allowing these losses to be deducted in future years, the bill aligns state tax law more closely with federal tax regulations, which already permit such practices. This could encourage more investment activity, benefiting the state's economy by fostering a more favorable investment climate and potentially increasing revenue through enhanced compliance and tax contributions from an active investment community.

Summary

Assembly Bill A3038 proposes an amendment to the New Jersey gross income tax code, specifically allowing taxpayers to carry forward certain losses from the sale or exchange of property. The current law does not permit taxpayers to offset gains from one taxable year with losses from another year, effectively trapping taxpayers who might have suffered a loss in a given year. This new provision aims to provide taxpayers with greater flexibility and equity in their tax obligations, enabling them to use previous losses to mitigate future tax liabilities.

Contention

However, the introduction of this bill has also sparked debate among lawmakers and financial experts about its long-term implications for the state's revenue. Critics may argue that it could disproportionately benefit wealthier individuals or investors at a time when there are significant budgetary pressures on state finances. Supporters assert that it promotes fairness in taxation and aligns with common practices among other states. The bill's consideration will likely involve discussions on ensuring any unintended consequences are mitigated while still providing the intended tax benefits.