Allows corporation business tax and gross income tax credits to businesses paying a salary differential to National Guard members or reservists on active duty.

S1059 TR

SENATE, No. 1059

STATE OF NEW JERSEY

222nd LEGISLATURE

�

PRE-FILED FOR INTRODUCTION IN THE 2026 SESSION

Sponsored by:

Senator NILSA I. CRUZ-PEREZ

District 5 (Camden and Gloucester)

Senator SHIRLEY K. TURNER

District 15 (Hunterdon and Mercer)

Co-Sponsored by:

Senators Space and Amato

SYNOPSIS

���� Allows corporation business tax and gross income tax
credits to businesses paying a salary differential to National Guard members or
reservists on active duty.

CURRENT VERSION OF TEXT

���� As reported by the Senate Military and Veterans'
Affairs Committee with technical review.

��

An Act

allowing a credit against the corporation business tax and the New Jersey gross
income tax to businesses employing National Guard members and reservists and
supplementing P.L.1945, c.162 (C.54:10A-1 et seq.) and Title 54A of the New
Jersey Statutes.

����
Be It Enacted

by the Senate and General Assembly of
the State of New Jersey:

���� 1.��� a.� A taxpayer shall be
allowed a credit against the tax imposed pursuant to section 5 of P.L.1945,
c.162 (C.54:10A-5), in an amount equal to the salary and wages paid by the
taxpayer to a qualified employee for the period while the qualified employee is
on active duty during the privilege period, not to exceed the amount which,
when added to the salary paid by the United States government for the period
while the qualified employee is on active duty during the privileged period,
equals the employee's regular salary or wages.

���� b.��� As used in this section:

���� "Qualified employee"
means an employee, who is also a member of the National Guard or of a reserve
component of the Armed Forces of the United States, receiving orders for
mobilization to active duty service.

���� c.���� The amount of the
credit applied under this section against the tax imposed pursuant to section 5
of P.L.1945, c.162, for a privilege period, when taken together with any other
credits allowed against the tax imposed pursuant to section 5 of P.L.1945, c.162, 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.� The priority in which credits
allowed pursuant to this section and any other credits taken shall be as
determined by the Director of the Division of Taxation.� The amount of the
credit otherwise allowable under this section which cannot be applied for the
privilege period due to the limitations of this subsection or under other
provisions of P.L.1945, c.162 may be carried over, if necessary, to the seven
privilege periods following the privilege period for which the credit was
allowed.

���� 2.��� a.� A taxpayer shall be
allowed a credit against the tax otherwise due for the taxable year under the
"New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., in an
amount equal to the salary and wages paid by the taxpayer to a qualified employee
for the period while the qualified employee is on active duty during the
taxable year, not to exceed the amount which, when added to the salary paid by
the United States government for the period while the qualified employee is on
active duty during the taxable year, equals the employee's regular salary or
wages.

���� b.��� As used in this section:

���� "Qualified employee"
means an employee, who is also a member of the National Guard or of a reserve
component of the Armed Forces of the United States, receiving orders for
mobilization to active duty service.

���� c.���� The amount of the
credits applied under this section for a taxable year, when taken together with
any other credits allowed against the tax imposed pursuant to N.J.S.54A:1-1 et
seq., shall not exceed 50 percent of that amount of the taxpayer's liability
for tax for the taxable year that bears the same proportional relationship to
the total amount of such liability as the amount of the taxpayer's gross
income, derived from New Jersey sources and attributable to the business or
professional activity in which the taxpayer employs the qualified employee
during that taxable year, bears to the taxpayer's entire gross income for that
year.� Credits allowed pursuant to this section shall be taken only after the taxpayer
has taken all credits allowed under section 2 of P.L.2000, c.80 (C.54A:4-7).�
The amount of the credit otherwise allowable under this section which cannot be
applied for the taxable year due to the limitations of this subsection may be
carried over, if necessary to the seven taxable years following the taxable
year for which the credit was allowed.

���� d.��� A partnership shall not
be allowed a credit under this section directly, but the amount of credit of a
taxpayer in respect of a distributive share of partnership income under the
"New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., shall be
determined by allocating to the taxpayer that proportion of the credit acquired
by the partnership that is equal to the taxpayer's share, whether or not
distributed, of the total distributive income or gain of the partnership for
its taxable year ending within or with the taxpayer's taxable year.

���� 3.��� This act shall take
effect immediately, and section 1 shall apply to privilege periods beginning
after enactment and section 2 shall apply to taxable years beginning after
enactment.