Bill > A716

Introduced Session

This bill allows farm operators to accelerate certain tax deductions for business expenses for purposes of calculating State corporation business tax and gross income tax, matching two provisions of the federal tax code. Specifically, the bill would allow the accelerated depreciation of assets to the extent allowed under section 168 of the federal Internal Revenue Code, and the immediate deduction of certain capital expenses to the extent allowed under section 179 of the federal Internal Revenue Code. Generally, under section 167 of the federal Internal Revenue Code, taxpayers are allowed to deduct a reasonable allowance for the wear and tear, or depreciation, of an asset used in trade or business. Sections 168 and 179 allow an accelerated depreciation if certain conditions are met. New Jersey, however, decoupled its tax law from those provisions following changes to those provisions in the early 2000s. Instead of allowing depreciation as allowed under current federal law, the State allows depreciation as federal law allowed it in 2002 for section 179 and in 2001 for sections 167 and 168. Since that time, further modifications were made to sections 168 and 179. Under current section 179, a taxpayer may deduct up to $1 million of qualified assets purchased and placed in service in the tax year. The deduction cannot exceed taxable income, and the deduction is phased out if a company's total qualified assets placed in service during the year exceed $2.5 million. The limits and thresholds for the section 179 deduction are scheduled to be indexed for inflation in future years. Under current section 168, a taxpayer may depreciate an additional 100% of the adjusted cost of eligible property. This "bonus" depreciation is scheduled to decrease by 20% in 2023 and every year thereafter until it reaches 0% in 2027.

AI Summary

Committee Categories

Mike Torrissi (R)*,  Alex Sauickie (R), 

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

Official Document