NJBIA Supports 2 COVID Tax Relief Bills for NJ Businesses

NJBIA will testify today in support of two COVID-19 tax relief bills, including legislation that would make sure New Jersey businesses that received federal assistance under the Paycheck Protection Program (PPP) will not have to pay state income taxes on their loans, even if those loans are forgiven.

In testimony prepared for this afternoon’s Senate Budget & Appropriations Committee meeting, NJBIA Vice President of Government Affairs Christopher Emigholz pointed out that the federal government has already clarified that forgiven PPP loans do not count as federal taxable income and can be used as a business expense for tax purposes.

The bill being considered today, S-3234, sponsored by Senator Troy Singleton (D-7), would ensure that New Jersey does the same.

“The possibility of New Jersey increasing state taxes on the back of that federal aid goes against the purpose of that aid,” Emigholz said. “New Jersey PPP recipients are contacting NJBIA and worried about this tax issue, and S-3234 will follow the federal lead and ensure that there are no added state tax liabilities due to PPP.”

NJBIA also supports a second bill, S-3305 sponsored by Senator Bob Smith (D-17), that allows businesses to take a gross income tax credit for COVID-19 related improvements designed to reduce the spread of the virus in nonresidential buildings.

The credit would be allowed for expenditures made during the 2020, 2021 and 2022 tax years and cover expenses such as bipolar ionization and ultraviolet lighting to disinfect indoor air and surfaces; infrared thermometers to screen employees and visitors; transparent sneeze guards; touchless entryway and security; ventilation improvements; and other equipment.

“By providing a tax benefit for those improvements, we make our state safer while also giving some relief to struggling businesses that need tax relief,” Emigholz said. He asked that the tax credit be made available to corporation business taxpayers as well as pass-through businesses.

“NJBIA does request an amendment to S-3305 to expand the tax benefit to CBT taxpayers as well as the income taxpayers already covered in the bill,” Emigholz said.

Emigholz stressed that New Jersey businesses and the millions of people they employ need help to survive the pandemic. The state’s 10.2% unemployment rate in November was the worst in the nation and about 40% of New Jersey’s workforce has filed for unemployment benefits at one point or another since COVID-19 hit the state last March, he said.

“The number of small businesses open is down 31.4% since the start of 2020,” Emigholz said. “This decline is worse than our neighbors in New York and Pennsylvania, as well as the nation, showing that we need bills like these.”