Changes to the NJ Corporation Business Tax Act

On June 30, 2023, New Jersey’s legislature approved a significant corporation business tax (CBT) overhaul, the key provisions of which include:

1. Modifying portions of the CBT code addressing the way earnings are apportioned to the state;

2. Ending the 2.5% surcharge on CBT filers with allocated taxable net income over $1 million; 

3. Expanding the 50% exclusion for global intangible low-taxed income (same as under federal law) to 95%; 

4. Introducing a “convenience of the employer test” in connection with remote workers subject New York’s income tax (i.e., employees living in New York and doing work for a New Jersey company that is not required to be performed in New York would be subject to New Jersey taxation), and potentially allowing those workers to claim a credit against their New York state tax liability; 

5. Enacting a non-refundable gross income tax credit for workers who transfer from an out-of-state location to an in-state area, where the credit would equal half the amount of taxes owed due to readjustment of New Jersey’s credit for taxes paid to another state; and

6. Establishing a pilot program, managed by the Economic Development Authority, to provide grants to businesses enabling them to relocate their New Jersey resident employees assigned in outside locations to New Jersey areas, with qualifying companies having twenty-five or more full-time employees and being primarily located in another state.  

Please contact your MSPC advisor for additional information on how this may impact your business.