Bill > S535

Introduced Session

This bill revises the corporation business tax (CBT) and the New Jersey gross income tax (GIT) to allow taxpayers to elect to expense the cost of certain depreciable business assets, placed in service on or after January 1, 2020, pursuant to the provisions of section 179 of the federal Internal Revenue Code. Section 179 permits taxpayers (in lieu of taking deductions for the depreciation of the property over time) to elect to deduct from taxable income as an expense the full purchase price, up to a limit, which was $1,000,000 in 2018, of certain qualified property that is purchased by a taxpayer for use in the active conduct of a trade or business for the taxable year in which the property is placed in service, subject to dollar and income limitations and other rules. The dollar limitation provides that the maximum deduction that a taxpayer may claim in a taxable year is reduced by the amount by which the aggregate cost of the qualified property exceeds a phaseout threshold, which was $2,500,000 in 2018. The income limitation under Section 179 bars a taxpayer from claiming a deduction that is greater than its taxable income from the active conduct of its trade or business. Any amount that a taxpayer cannot deduct for a taxable year because of the income limitation may be carried forward to a future year pursuant to section 179. Because of these dollar and income limitations, which are adjusted annually for inflation, the deduction allowed pursuant to section 179 is particularly useful to small businesses. Since 2004, the CBT and the GIT have provided that taxpayers cannot elect to deduct as an expense certain depreciable business assets, except as was allowed for federal tax purposes by section 179 as it read on December 31, 2002, when determining entire net income for CBT purposes and the amount of a category of income pursuant to the GIT that is net of expenses. This bill amends those provisions of State law to re-link the CBT and the GIT with section 179 of the federal Internal Revenue Code, as it now reads and may read in the future. The bill would apply to privilege periods and taxable years commencing on or after January 1, 2020.

Committee Categories

Stephen Sweeney (D)*, 

Introduced in the Senate, Referred to Senate Budget and Appropriations Committee (on 01/14/2020)

Official Document