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A1757
ASSEMBLY, No. 1757
STATE OF NEW JERSEY
222nd LEGISLATURE
�
PRE-FILED FOR INTRODUCTION IN THE 2026 SESSION
Sponsored by:
Assemblyman ANTHONY S. VERRELLI
District 15 (Hunterdon and Mercer)
Assemblywoman VERLINA REYNOLDS-JACKSON
District 15 (Hunterdon and Mercer)
Assemblyman WILLIAM B. SAMPSON, IV
District 31 (Hudson)
SYNOPSIS
���� Provides corporation business tax and gross income
tax credits for businesses that employ formerly incarcerated individuals.
CURRENT VERSION OF TEXT
���� Introduced Pending Technical Review by Legislative
Counsel.
��
An Act
providing corporation business tax and gross income tax
credits for businesses that employ formerly incarcerated individuals, and
supplementing P.L.1945, c.162
(C.54:10A-1 et seq.) and Title 54A of New Jersey Statutes.
����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:
���� 1.��� a.� (1)� For privilege periods beginning
on or after January 1 next following the enactment of P.L.��� , c.���
(C.������� ) (pending before the Legislature as this bill), a taxpayer shall be
allowed a credit against the tax due pursuant to section 5 of P.L.1945, c.162
(C.54:10A-5) in an amount equal to the value of 10 percent of qualified wages
paid in the privilege period to a formerly incarcerated individual in the
course of sustained employment.� For each privilege period, a taxpayer�s credit
allowed pursuant to this section shall not exceed $1,200 for each formerly
incarcerated individual.�
���� (2)�� For a taxpayer to qualify for the credit
allowed pursuant to this section for a privilege period, the taxpayer shall
comply with the requirements of this paragraph.
���� Twenty-five percent of the taxpayer�s new
employees for the privilege period for which the credit is claimed shall be
formerly incarcerated individuals.
���� If the taxpayer received the credit allowed
pursuant to this section for the privilege period immediately preceding the
privilege period for which the credit is claimed, then 50 percent of the
formerly incarcerated individuals hired in the immediately preceding period
shall remain employed by the taxpayer for the privilege period for which the
credit is claimed.
���� The taxpayer shall regularly conduct specific
recruitment efforts to hire formerly incarcerated individuals and members of
the immediate families of formerly incarcerated individuals.
���� b.��� (1)�� The order of priority of the
application of the credit allowed pursuant to this section and any other
credits allowed against the tax imposed pursuant to section 5 of P.L.1945,
c.162 (C.54:10A-5) for a privilege period shall be as prescribed by the director.
���� The amount of the credit applied pursuant to
this section, added together with any other credit allowed against the tax
imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), shall not exceed
50 percent of the tax liability otherwise due and shall not reduce the tax
liability to an amount less than the statutory minimum provided in subsection
(e) of section 5 of P.L.1945, c.162.
���� Unused credit resulting from the limitations of
this paragraph may be carried forward, if necessary, for use in future
privilege periods following the privilege period for which the credit is
allowed.
���� (2)�� A taxpayer shall not be granted a credit
pursuant to this section for the qualified wages paid to a formerly
incarcerated individual in a privilege period if the qualified wages of the
formerly incarcerated individual or the job providing qualified wages to the
individual is included in the calculation of another credit against any State
tax or a grant pursuant to P.L.1996, c.26 (C.34:1B-124 et seq.) for a period of
time that coincides with the applicable privilege period.�
���� (3)�� If the director determines that a taxpayer
is displacing employees and replacing the employees with formerly incarcerated
individuals for the primary purposes of obtaining the credit allowed pursuant
to this section, the director shall deny the credit allowed under this section
for the taxpayer and shall issue a tax assessment for the recapture of credit
previously allowed to the taxpayer under this section plus an assessment of 50
percent of any credit subject to recapture as penalty.
���� c.���� As used in this section:
���� �Director� means the Director of the Division of
Taxation in the Department of Treasury.
���� "Formerly incarcerated individual"
means an individual who previously spent time in the custody of law enforcement
authorities, including the Department of Corrections, following conviction of a
criminal offense or following the entry of a guilty plea to a criminal charge
by the person before a court of competent jurisdiction, who is no longer
subject to incarceration.
���� �Member of the immediate family� means a
formerly incarcerated individual�s spouse, parent, sibling, or child.
���� "Qualified wages" mean any salaries,
wages, and remuneration subject to the "New Jersey Gross Income Tax
Act," N.J.S.54A:1-1 et seq., paid to a formerly incarcerated individual on
or after January 1 next following the enactment of P.L.��� , c.��� (C.������� )
(pending before the Legislature as this bill) for labor rendered in service to
an enterprise of the taxpayer.
���� "Sustained employment" means a period
of time no less than 185 business days during the privilege period in which a
formerly incarcerated individual is earning qualified wages.
���� 2.��� a.� (1)� For taxable years commencing on
or after January 1 next following the enactment of P.L.��� , c.��� (C.������� )
(pending before the Legislature as this bill), a taxpayer shall be allowed a
credit against the tax due pursuant to "New Jersey Gross Income Tax
Act," N.J.S.54A:1-1 et seq., in an amount equal to the value of 10 percent
of qualified wages paid in the taxable year to a formerly incarcerated
individual in the course of sustained employment.� For each taxable year, a
taxpayer�s credit allowed pursuant to this section shall not exceed $1,200 for
each formerly incarcerated individual.
���� (2)�� For
a taxpayer to qualify for the credit allowed pursuant to this section for a taxable
year, the taxpayer shall comply with the requirements of this paragraph.
���� Twenty-five
percent of the taxpayer�s new employees for the taxable year for which the
credit is claimed shall be formerly incarcerated individuals.
���� If
the taxpayer received the credit allowed pursuant to this section for the taxable
year immediately preceding the taxable year for which the credit is claimed,
then 50 percent of the formerly incarcerated individuals hired in the
immediately preceding taxable year shall remain employed by the taxpayer for
the taxable year for which the credit is claimed.
���� The
taxpayer shall regularly conduct specific recruitment efforts to hire formerly
incarcerated individuals and members of the immediate families of formerly
incarcerated individuals.
���� b.��� (1) A credit allowed pursuant to this
section shall not reduce the tax liability otherwise due pursuant to the
"New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., for a
taxable year to an amount less than zero.
���� Unused credit resulting from limitations of this
paragraph may be carried forward if necessary to future taxable years following
the taxable year for which the credit was allowed.� The form and method of
carry forward shall be as prescribed by the director.��
���� (2)�� A taxpayer shall not be granted a credit
pursuant to this section for the qualified wages paid to a formerly
incarcerated individual in a taxable year if the qualified wages of the
formerly incarcerated individual is included in the calculation of another
credit against any State tax or a grant pursuant to P.L.1996, c.26 (C.34:1B-124
et seq.) for a period of time that coincides with the applicable taxable year.
���� (3)�� If the director determines that a taxpayer
is displacing employees and replacing the employees with formerly incarcerated
individuals for the primary purposes of obtaining the credit allowed pursuant
to this section, the director shall deny the credit allowed under this section
for the taxpayer and shall issue a tax assessment for the recapture of credit
previously allowed to the taxpayer under this section plus an assessment of 50
percent of any credit subject to recapture as penalty.
���� c.���� As used in this section:
���� �Director� means the Director of the Division of
Taxation in the Department of Treasury.
���� "Formerly incarcerated individual"
means an individual who previously spent time in the custody of law enforcement
authorities, including the Department of Corrections, following conviction of a
criminal offense or following the entry of a guilty plea to a criminal charge
by the person before a court of competent jurisdiction, who is no longer
subject to incarceration.
���� �Member of the immediate family� means a
formerly incarcerated individual�s spouse, parent, sibling, or child.
���� "Qualified wages" mean any salaries,
wages, and remuneration subject to the "New Jersey Gross Income Tax
Act," N.J.S.54A:1-1 et seq., paid to a formerly incarcerated individual on
or after January 1 next following the enactment of P.L.��� , c.��� (C.������� )
(pending before the Legislature as this bill) for labor rendered in service to
an enterprise of the taxpayer.
���� "Sustained employment" means a period
of time no less than 185 business days during the taxable year in which a
formerly incarcerated individual is earning qualified wages.
���� 3.��� This act shall take
effect immediately.
STATEMENT
���� This bill provides a
corporation business tax credit and gross income tax credit for qualified wages
for employing formerly incarcerated individuals.
���� The two credits established by
this bill provide an employer with a credit in the amount of 10 percent of the
wages paid to a formerly incarcerated individual.� The credits may not exceed
$1,200 for each formerly incarcerated individual.� The bill defines a formerly
incarcerated individual as an individual who previously spent time in the
custody of law enforcement authorities, including the Department of
Corrections, following conviction of a criminal offense or following the entry
of a guilty plea to a criminal charge by the person before a court of competent
jurisdiction, who is no longer subject to incarceration.� To be creditable,
wages must also arise from employment of a formerly incarcerated individual for
at least 185 business days of the applicable tax year or privilege period.
���� To qualify for a credit, the
bill imposes a series of conditions on a taxpayer as an employer.� For a tax
year or privilege period that the credit is claimed, the bill requires that 25
percent of the taxpayer�s new employees be formerly incarcerated individuals.�
For tax years or privilege periods immediately subsequent to a prior credit
year, the bill further requires that 50 percent of the qualified veterans hired
during that time must remain employed by the taxpayer. Additionally, the bill
requires the taxpayer to make efforts to recruit formerly incarcerated
individuals and members of the immediately family of formerly incarcerated
individuals.
���� In addition to providing the
terms of credit qualification, the bill contains provisions aimed at preventing
potential misuse of the credit.� The bill prohibits taxpayers from
simultaneously using the wages or employment of the formerly incarcerated individual
to qualify for the credit and any other generally available employment
incentive that comes in the form of a State tax credit.� The bill also empowers
the Director of the Division of Taxation in the Department of the Treasury to
recapture the credit, plus an additional 50 percent penalty, if the director
determines that the employer displaced employees to replace them with formerly
incarcerated individuals for the primary purpose of taking advantage of the
credit.