TRENTON – The Senate Budget and Appropriations Committee today approved a bill sponsored by Senate President Richard J. Codey and Senator Barbara Buono that would aid struggling businesses during the current economic crisis, and help New Jersey’s business environment remain competitive with other neighboring states. The committee approved bill S-2130, which would increase the time period in which a net operating loss (NOL) can be deducted from a corporation’s business tax, from seven to twenty years.
“At the very least, from an economic standpoint, this bill will put us on par with other states, particularly our surrounding neighbors,” said Senator Codey (D-Essex). “Hopefully, it will encourage new businesses to set up shop here, help keep some of our struggling businesses in state and promote further investment. With nearly everyone feeling some effects from the current economic crisis, this bill is extremely timely. Hopefully, we can get it approved by both houses shortly to provide a life preserver for businesses struggling to stay afloat until the current tempest subsides.”
“With an economic crisis threatening to bring the nation’s credit market into collapse, New Jersey needs to encourage business growth and greater investment in the State,” said Budget Committee Chair, Senator Buono, D-Middlesex. “Hopefully, by bringing the net-operating loss provisions in our corporate business tax into line with the rest of the nation, we can begin to repair the damage to New Jersey’s business climate. At a time when our economic future is anything but certain, New Jersey needs to make changes in our corporate business tax to weather the coming fiscal storm.”
Essentially, if a taxpayer has more business expenses than business income in a tax year, the taxpayer has a net operating loss for that year. The NOL can be deducted from taxable income in later years to reduce tax liability and help struggling businesses weather a temporary financial crises. Generally, under the corporation business tax, NOL carry-forwards have been allowed to offset liability for the seven tax years following the tax year in which the losses were incurred. The extension to 20 years that would be allowed under this bill mirrors carry-forward provisions in the federal tax code and that of other neighboring states, such as New York, Pennsylvania, Connecticut, and Delaware.
The bill now heads to the full Senate for a vote.
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