The latest proposal – Senate Bill 3759 – provides tax credits for wages that certain small businesses paid to employees to keep them on board over the course of the public health emergency.
Lawmakers also moved a pair of similar bills earlier this week that would allow businesses to claim tax exemptions for equipment they purchased to comply with the COVID-19 shutdowns, sanitization rules and capacity restrictions.
Eligibility for the new tax breaks is limited to businesses with up to 100 employees, and to those employers in retail; health care and social assistance; arts; entertainment; recreation; accommodation and food services; and “other services,” which excludes public administration.
The bill would provide for a tax credit equal to 10% of the wages paid to a qualifying employee; the amount is bumped up to 20% for businesses located in a “COVID-impact county,” which is a county with an unemployment rate higher than the statewide rate.
“Many of these businesses answered the call above and beyond during the worst months of the COVID-19 pandemic, and this tax credit will provide them a bit of a cushion as they continue to rebuild and rehabilitate their businesses,” reads a prepared Dec. 9 statement from one of the main sponsors and the incoming Senate President, Sen. Nicholas Scutari, D-22nd District.
The tax break is available for businesses for both 2020 and 2021, according to the bill.
Lawmakers approved the measure in a 5-0 vote by the Senate Economic Growth Committee at their Dec. 9 meeting, but has not advanced at all in the state Assembly.
“The industries targeted in this bill that have been hit harder by the pandemic are often the ones with more minimum wage jobs in businesses that are absorbing this wage increase without the revenue to sustain it,” Chris Emigholz, vice president of government affairs at the New Jersey Business & Industry Association, told lawmakers on Dec. 8.
“This targeted support will help the vulnerable small businesses that we are worried about without causing the long-term loss of tax revenue.”
The bills approved Dec. 6 allow employers to immediately deduct up to $150,000 on their taxes for the costs of complying with the COVID-19 mandates and restrictions in 2020 and 2021, such as reduced capacity and social distancing, ventilation requirements, plexiglass and outdoor dining equipment.
One measure – Senate Bill 4254 – limits the tax exemption to businesses with up to 50 employees. Another measure – Senate Bill 3404 – would extend the tax exemption to any non-chain restaurant with up to 100 employees. The second was approved by a 12-0 vote by the Senate Budget and Appropriations Committee at a Dec. 6 hearing.
“Small businesses have suffered immensely as a result of the COVID-19 pandemic,” sponsor Sen. Troy Singleton, D-7th District, said in a statement this week.
“When they were able to open their doors to patrons, they had to completely redesign their spaces for safe accommodations and purchase supplies to keep their customers and their staff safe – all of which were out of pocket costs.[/vc_column_text][/vc_column][/vc_row]