News Department

Bill reducing tax payments for employers clears panel

NEW JERSEY – Qualifying New Jersey corporations would be able to reduce their federal taxes under legislation sponsored by Senator Steven Oroho and advanced Monday by the Senate Budget and Appropriations Committee.

Oroho’s bill (S-4068) amends the way business alternative income tax can be calculated in a manner that would reduce federal tax liabilities.

“We can help corporations cut their tax bill to the feds without reducing tax revenue to the state,” said Oroho, the Senate Republican Budget Officer. “Money that would otherwise go to Washington could remain here in New Jersey if this measure is enacted. It is time for some good news for businesses in this state.”

This bill revises the way the optional/elective pass-through business alternative income tax is calculated.

Currently, when a pass-through entity chooses to pay the business alternative income tax, the tax 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, Oroho said.

Under Oroho’s bill, for owners of the entity that are New Jersey residents, the pass-through entity’s tax is calculated based on all income of the entity as long as the income would be taxable under the gross income tax. Resident owners of pass-through entities will therefore be able to obtain a larger gross income tax credit.

For owners of the entity that are non-residents, the pass-through entity’s tax will continue to be based on income derived from business conducted in New Jersey, Oroho said.

“Businesses have suffered tough times during the pandemic, and only a week ago they were 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.”

Jay Edwards

Born and raised in Northwest NJ, Jay has a degree in Communications and has had a life-long interest in local radio and various styles of music. Jay has held numerous jobs over the years such as stunt car driver, bartender, voice-over artist, traffic reporter (award winning), NY Yankee maintenance crewmember and peanut farm worker. His hobbies include mountain climbing, snowmobiling, cooking, performing stand-up comedy and he is an avid squirrel watcher. Jay has been a guest on America’s Morning Headquarters,program on The Weather Channel, and was interviewed by Sam Champion.

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