Bill > A2565

Introduced Session

This bill establishes a two-year carryback deduction for net operating losses incurred by corporation business taxpayers. A net operating loss carryback deduction allows corporate taxpayers to file amended income tax returns for past tax years in which they were profitable, use current tax year business losses to offset those profits, and receive refunds of taxes paid in past tax years. Along with carryforward net operating loss deductions (which allow corporations to deduct from taxable income in future years net operating losses sustained in preceding tax years), carryback net operating loss deductions enable businesses to average their income over a time period that more closely corresponds to their investment horizon. The federal government and 17 states authorize businesses to carry back and forward net operating losses. The standard federal carryback period and that of most states is two years. New Jersey, on the other hand, only allows for a 20-year carryforward of net operating losses. The inclusion of a carryback provision in its corporation business tax code would make New Jersey not just more competitive relative to other states, but it would also counteract the growth-stunting perception within the business community that the State is more interested in penalizing and thwarting than in rewarding and encouraging the creation and growth of businesses. Even though the enactment of this legislation would not turn New Jersey into the state with the business-friendliest system of taxation, it would nonetheless make New Jersey more welcoming to businesses and thus encourage them to invest and create employment in the Garden State.

Committee Categories

Erik Peterson (R)*, 

Introduced, Referred to Assembly Commerce, Economic Development and Agriculture Committee (on 01/09/2024)

Official Document