Bob Charron sat with State & Local Tax Experts, Tom Corrie and Alan Goldenberg to find out everything you need to know about the recently signed legislation that gives small businesses in New Jersey a workaround for the $10,000 cap on state and local tax deductions under the Tax Cuts and Jobs Act (TCJA).
Listen to our latest podcast, here.
Who does this impact? Businesses in New Jersey, such as sub-S corporations, partnerships, LLCs and sole proprietorships
What changed? These New Jersey businesses can elect to pay income taxes at the entity level rather than the personal income tax level
When is this effective? 2020
Additional information about why this may be a substantial benefit to you:
- New Jersey is imposing an elective entity level tax, which would then pass a tax credit down to individual shareholders, partners or members of pass-through entities. The tax credit that passes down would be equal to 100% of the individual’s tax paid at the entity level
- There are four graduated tax rates, depending upon the distributive share of each partner and how much income is earned by their percentage shared within the pass through entity
- New Jersey has imposed a reciprocal credit for state residents who have similar taxes imposed by other states
Reach out your Friedman advisor for more information on the new Act.