Imposes temporary $1 million cap on use of net operating loss deductions under corporation business tax for certain privilege periods, the official text

[First Reprint]

ASSEMBLY, No. 5322

STATE OF NEW JERSEY

222nd LEGISLATURE

INTRODUCED JUNE 23, 2026

Sponsored by:

Assemblyman  ANTHONY S. VERRELLI

District 15 (Hunterdon and Mercer)

Assemblywoman  KATIE BRENNAN

District 32 (Hudson)

Senator  NICHOLAS P. SCUTARI

District 22 (Somerset and Union)

SYNOPSIS

Imposes temporary $1 million cap on use of net
operating loss deductions under corporation business tax for certain privilege
periods.

CURRENT VERSION OF TEXT

As reported by the Assembly Budget Committee on June
28, 2026, with amendments.

An Act imposing a temporary $1 million cap on the use of net
operating loss deductions under the corporation business tax and supplementing
P.L.1945, c.162 (C.54:10A-1 et seq.).

Be It
Enacted by the Senate and General Assembly of
the State of New Jersey:

1.   a.
As used in this section, "net operating loss deduction" means the
amount of any deduction taken by a taxpayer for a net operating loss carryover,
prior net operating loss conversion carryover, post-allocation net operating
loss, net operating loss carryover in a combined group context, or any
combination thereof.

b.    Notwithstanding the
provisions of paragraph (6) of subsection (k) or subsections (u) and (v) of
section 4 of P.L.1945, c.162 (C.54:10A-4), section 18 of P.L.2018, c.48
(C.54:10A-4.6), or any other law to the contrary, for the purposes of computing
taxable net income, as that term is defined in subsection (w) of section 4 of
P.L.1945, c.162 (C.54:10A-4), the amount of any net operating loss deduction
claimed by a taxpayer1, except for a public utility,1 shall
not, in the aggregate, exceed $1,000,000 for a privilege period ending on or
after July 31, 2026 but before July 31, 2030.  For a taxpayer with a privilege
period of less than twelve months, the limit set forth in this subsection shall
be prorated by the number of months covered during the privilege period.

c.    Notwithstanding the
provisions of any law to the contrary, for a privilege period ending on or
after July 31, 2030 but before July 31, 2032, for the purposes of computing
taxable net income, as that term is defined in subsection (w) of section 4 of
P.L.1945, c.162 (C.54:10A-4), a taxpayer that is disallowed any portion of a
net operating loss deduction pursuant to the limitations imposed by subsection
b. of this section shall be allowed the amount of the net operating loss
deduction that remains unused due to the limitations of subsection b. of this
section, except that the deduction may reduce the taxpayer's allocated entire
net income by no more than 75 percent for the privilege period.

d.    A taxpayer with a
deduction that was reduced or disallowed pursuant to the limitations set forth
in subsection b. or c. of this section, as applicable, shall be permitted to
carry over the amount of the net operating loss deduction that remains unused
due to the limitations of those subsections for an additional six privilege
periods immediately following the privilege period during which the net
operating loss deduction would have otherwise expired.

e.    The limitations imposed
by this section shall not restrict the surrender or acquisition of a
corporation business tax benefit certificate pursuant to section 1 of P.L.1997,
c.334 (C.34:1B-7.42a) and shall not restrict the application of a corporation
business tax benefit certificate acquired pursuant to section 2 of P.L.1997,
c.334 (C.54:10A-4.2).

f.     Notwithstanding the
provisions of any law to the contrary, no interest or penalty shall be assessed
against a taxpayer for an underpayment of an installment payment of estimated
tax pursuant to section 5 of P.L.1981, c.184 (C.54:10A-15.4), provided that:

(1)  the installment payment
is due and payable after December 31, 2025 but before January 1, 2027; and

(2)  the underpayment of
estimated tax results from the limitations imposed by subsection b. or c. of
this section, as applicable.

2.    This act shall take
effect immediately and shall apply to any privilege period ending on or after
July 31, 2026.