Press Release
Senator Steve Oroho Senator Steve Oroho (R-24)
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Contact: Robbie Kenney / (609) 847-3600
January 18, 2022
Oroho’s Bipartisan Bill Reducing Tax Burden on NJ Employers Signed into Law

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Senate Republican Leader Steve Oroho’s legislation allowing qualifying New Jersey corporations to reduce their federal tax liabilities without costing the state any revenue was signed by the Governor today.

Legislation sponsored by Sen. Steve Oroho and signed into law today will allow qualifying New Jersey businesses to reduce the money they send to Washington.  (Pixabay)

The new law (S-4068) amends the way business alternative income tax can be calculated in a manner that would reduce federal taxes for employers.

“This will help New Jersey corporations cut their tax bill to the feds without impacting state revenue,” said Oroho (R-24). “This is good news for employers in a state infamous for its inhospitable business environment. Money that would otherwise go to Washington will remain here in New Jersey.”

The bipartisan measure revises the way the optional/elective pass-through business alternative income tax is calculated.

“Businesses have suffered tough times during the pandemic, and they were recently slammed by Round 1 of the payroll tax increase,” Oroho said. “This is a sensible solution that will help some of the employers our economy depends on.”

Previously, when a pass-through entity chooses to pay the alternative tax, the obligation is calculated based on the portion of the entity’s income that is derived from operations conducted in New Jersey. The owners of the entity are then allowed a gross income tax credit based on the amount of tax the entity paid.

Because the tax is calculated using only the entity’s income derived from New Jersey, the tax is sometimes lower than it otherwise may be and therefore the entity’s owners’ tax credit is lower.

Under the new law, the pass-through entity’s tax will be calculated based on all income of the entity if the income would be taxable under the gross income tax. The owners of pass-through entities who are New Jersey residents will therefore be able to obtain a larger gross income tax credit.

Related Facebook Post:
https://www.facebook.com/steveoroho/posts/349732880301361

Related Tweet:
https://twitter.com/stevenoroho/status/1483543167450419203

Website Post:
https://www.senatenj.com/index.php/oroho/orohos-bipartisan-bill-reducing-tax-burden-on-nj-employers-signed-into-law/55884