The New Jersey Business & Industry Association said Thursday it is supporting Assembly Bill 4807/Senate Bill 3246, which allows a refundable gross income tax credit for taxpayers earning income from pass-through businesses in a taxable year.
The legislation, which is led by bipartisan sponsorship, passed Thursday in the Assembly Appropriations Committee.
“This bill will preserve the ability of thousands of New Jersey small businesses registered as S Corporations and Limited Liability Corporations to fully deduct their state income taxes following changes in the federal Tax Cuts and Jobs Act,” said NJBIA Chief of Government Affairs Chrissy Buteas. “Protecting that tax deductibility for these job creators will ultimately strengthen our economy and give New Jersey a much-needed competitive boost in the region.”
The legislation, called the “Pass-Through Business Alternative Income Tax Act,” effectively amends New Jersey’s state tax code to a similar system that was in place prior to 1993 under which S corporations, LLCs and other business partnerships directly paid the state income tax liability of their owners and partners.
It establishes an elective entity-level tax to be paid by pass-through businesses and provides an offsetting credit to taxpayers who receive income from a pass-through business.