New Jersey Senate Bill S3722

New Jersey 2022-2023 Regular Session

• Introduced: 3/13/23
• Refer: 3/13/23

Caption

Provides tax credits to small businesses to offset increases in unemployment insurance contributions.

Impact

If enacted, S3722 would directly impact small businesses classified under the definition set by the U.S. Small Business Administration. This legislation aims to reduce the potential financial burden on small enterprises that might be facing increased unemployment insurance costs. The bill stipulates that tax credits will only be available in scenarios where these contributions exceed set thresholds. Additionally, provisions allowing for the forward-carrying of unused tax credits for up to seven years are designed to ensure that businesses can benefit from the credits in future tax years, enhancing their cash flow management capabilities.

Summary

Senate Bill 3722 aims to provide tax credits to small businesses in New Jersey to help offset the rising costs of unemployment insurance contributions. Specifically, the bill proposes that small businesses can receive credits against their corporation business tax and gross income tax based on the difference between their actual unemployment insurance contributions and those that would have been calculated using predetermined rates. This measure is expected to provide targeted financial support to small businesses as they navigate increased cost pressures associated with unemployment insurance contributions mandated by recent legislation (P.L.2020, c.150). The bill's provisions for tax credits are set to commence in the 2023 tax year and will extend to subsequent years depending on the circumstances surrounding unemployment rates.

Contention

While S3722 has garnered support among small business advocates, potential points of contention arise concerning the eligibility criteria for these tax credits. Notably, businesses that benefit from other relief mechanisms such as grants or subsidies would not qualify for the credits stipulated in this bill, drawing criticism from some stakeholders who argue that such limitations may exclude businesses that are in severe need of assistance. Moreover, discussions on whether the state should provide such tax relief during times of fiscal concern will likely influence public sentiment towards the bill's ultimate passage.