New Jersey Senate Bill S98

New Jersey 2022-2023 Regular Session

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

Caption

Provides corporation business tax credits and gross income tax credits to small business employers and farm employers for increases in certain mandatory employer contributions.

Impact

If enacted, S98 will enable eligible employers to claim a tax credit equivalent to the difference between their current and previous expenditures on mandatory employer contributions over a specified period. Specifically, the credit is capped at $12,000 annually per taxpayer and is only applicable for taxable years from January 1, 2020, to December 31, 2029. Employers who cannot utilize the full credit against their CBT liability may carry forward the unused portion for up to four subsequent periods, allowing for greater flexibility in financial management.

Summary

Senate Bill 98 (S98) is designed to provide financial relief to small business employers and farm employers in New Jersey through corporation business tax (CBT) credits and gross income tax (GIT) credits. The tax credits are aimed specifically at mitigating the financial impact of increased mandatory employer contributions for workers' compensation insurance and New Jersey Temporary Disability Insurance and Unemployment Insurance. The bill delineates eligibility criteria for small business and farm employers, stating that small business employers must employ fewer than 25 employees and generate less than $1 million in annual net receipts.

Contention

The bill has sparked discussions surrounding its financial implications for the state treasury and the extent to which it may benefit small-scale employers who are often burdened by rising insurance costs. Proponents argue that these credits will encourage stability and growth among small businesses and farms, which are vital to the local economy. Conversely, critics have raised concerns about the potential for reduced state tax revenue and whether the credits adequately address broader issues facing small employers beyond mere tax relief, such as operational sustainability and market competitiveness.