Bill
Bill > S2295
NJ S2295
NJ S2295Disallows tax deduction under corporation business tax and gross income tax for punitive damages paid in connection with legal action; includes amount paid as punitive damages on behalf of taxpayer in income for tax purposes.
summary
Introduced
01/13/2026
01/13/2026
In Committee
01/13/2026
01/13/2026
Crossed Over
Passed
Dead
Introduced Session
2026-2027 Regular Session
Bill Summary
This bill disallows tax deductions under the corporation business tax and the gross income tax for punitive damages paid or incurred in connection with a judgment in or settlement of a legal action and includes in a taxpayer's taxable income the amount paid to, or on behalf of, the taxpayer as insurance or otherwise by reason of the taxpayer's liability or agreement to pay punitive damages. Under current law, a corporation or an individual business owner may deduct the cost of court-ordered punitive damages as an "ordinary business expense." This tax loophole allows companies to wreak horrible damage to public assets and private property, destroying lives and livelihoods, and write it off as a cost of doing business. This bill eliminates that tax break, and requires corporations risking environmental destruction to face the true costs of their actions.
AI Summary
This bill disallows businesses from deducting payments of punitive damages, which are extra amounts awarded in lawsuits to punish wrongdoing, from their corporation business tax and gross income tax. Previously, companies could treat these punitive damages as a regular business expense, effectively reducing their tax burden. The bill also requires that any money received by a taxpayer, whether through insurance or other means, to cover their liability for punitive damages must be included as taxable income. This change aims to ensure that businesses face the full financial consequences of their actions, particularly in cases where their conduct causes significant harm.
Committee Categories
Justice
Sponsors (1)
Last Action
Introduced in the Senate, Referred to Senate Judiciary Committee (on 01/13/2026)
Official Document
bill text
bill summary
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bill summary
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bill summary
| Document Type | Source Location |
|---|---|
| State Bill Page | https://www.njleg.state.nj.us/bill-search/2026/S2295 |
| BillText | https://pub.njleg.gov/Bills/2026/S2500/2295_I1.HTM |
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