Further, these economic nexus provisions are in addition to any other nexus activities which may be applicable, such as physical presence.

Observations: Corporate apportionment/sourcing rules are used to determine New Jersey receipts and transactions. 86-272 is subject to New Jersey corporate minimum tax. A corporation that meets the new economic nexus test(s) but is otherwise protected from tax pursuant to federal law P.L. The following corporate tax changes apply to corporations for tax years ending on and after July 31, 2023, unless otherwise indicated.Ī corporation that derives in excess of $100,000 of receipts from New Jersey sources or that has 200 or more separate transactions delivered to New Jersey customers is deemed to have income tax nexus. While not actually part of the legislation, it should be noted that NJ’s 2.5% surcharge was not extended and, thus, expires for years beginning on and after January 1, 2024. After 2030, 5% of the remaining balance can be deducted per year until fully utilized. New Jersey deferred tax deduction for tax years beginning or after January 1, 2023, but before Janu1, a combined group that qualifies (see footnote) may deduct 1% of the amount necessary to recover the unfavorable deferred tax impact of New Jersey adopting combined reporting, per year. Observation: The NJ Division of Taxation’s recent interpretive guidance in TB-107 (July 11, 2023) limits the deduction to the “full value of the New Jersey qualified research expenditures.” For taxpayers that claim a New Jersey R&D credit in a tax year, the statute doesn’t appear to limit the deduction to only New Jersey expenditures. s.174, for the deduction of specified research and experimental expenditures. Research and Developmentįor tax years beginning on and after January 1, 2022, a deduction for research and experimental expenditures is allowed during the same tax year for which a New Jersey research and development tax credit is claimed, notwithstanding the timing schedule required by the federal Internal Revenue Code of 1986, 26 U.S.C.

Affiliates that were members of the federal consolidated return but were not members of the combined group included in the New Jersey combined return, the combined group and the affiliates will also be treated as having filed one federal consolidated return. s.163) shall apply to a combined group as though the combined group filed a federal consolidated return. The interest deduction limitation in subsection (j) of Section 163 of the Internal Revenue 41 Code (26 U.S.C. 163(j), for tax years beginning after December 31, 2017, and ending on and after July 31, 2022, the law codified the currently existing rules. Corporations Interest Addbacks/Deduction Limitationįor tax years ending on and after July 31, 2023, the addbacks for interest paid to a related party and related-party intangible expenses are repealed. The NJ Division of Taxation has already released its preliminary guidance regarding these changes: Changes to Corporation Business Tax, Gross Income Tax, and Other Requirements from P.L. The New Jersey budget (A.5323) that was signed on July 3, 2023, contains several corporate, pass-through entity and other tax changes as discussed below.

Nj 2022 tax brackets