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Bill

S 1059

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

2026-2027 Regular Session Introduced by Nilsa Cruz-Perez and 2 co-sponsors

New Jersey would offer CBT and GIT credits covering up to 50% of tax liability to employers for wages paid to National Guard/Reservist employees while on active duty, with carryfor

Referred to Senate Budget and Appropriations Committee
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WeVote Research Nonpartisan
Bill Summary · S 1059

Summary: S 1059 (New Jersey) – 2026 Session

Purpose and intent

  • The bill creates targeted tax credits for businesses that employ National Guard members or reservists who go on active duty.
  • The credits are designed to offset the difference between an employee’s regular salary and the military pay they receive while on active duty, encouraging continued employment and payroll retention during mobilization.

Key provisions

1) Corporate Business Tax (CBT) credit

  • Creates a credit against the CBT (Section 5 of P.L.1945, c.162) for each “qualified employee.”
  • Credit amount: The salary and wages paid by the taxpayer to a qualified employee while on active duty, limited so that plus the U.S. military pay would equal the employee’s regular salary or wages.
  • Eligibility and definitions:
    • “Qualified employee” = an employee who is also a member of the National Guard or a reserve component of the U.S. Armed Forces and whom the employee has mobilization orders.
  • Limitations and sequencing:
    • The CBT credit cannot exceed 50% of the tax liability for the privilege period after considering other credits.
    • The credit cannot reduce tax liability below the statutory minimum.
    • Any unused CBT credit can be carried forward to the next seven privilege periods, if needed.
    • Credit priorities (how it interacts with other credits) are determined by the Director of the Division of Taxation.

2) New Jersey Gross Income Tax (GIT) credit

  • Creates a credit against the New Jersey Gross Income Tax for each qualified employee.
  • Credit amount: The salary and wages paid by the taxpayer to a qualified employee while the employee is on active duty, limited so that plus the U.S. military pay would equal the employee’s regular salary or wages.
  • Eligibility and definitions mirror the CBT version.
  • Limitations and sequencing:
    • The GIT credit cannot exceed 50% of the taxpayer’s GIT liability for the year, prorated to reflect the portion of the business’s New Jersey-source gross income derived from the activity employing the qualified employee.
    • Credits must be taken after other credits allowed under existing statutes (specifically after credits under N.J.S.54A:4-7).
    • Unused GIT credits can be carried forward to seven subsequent years.
    • Partnerships: The credit is allocated to partners based on distributive share, rather than to the partnership directly.

3) Effective date

  • The act would take effect immediately.
  • Section 1 (CBT credit) applies to privilege periods beginning after enactment.
  • Section 2 (GIT credit) applies to taxable years beginning after enactment.

Who/what is affected

  • Businesses subject to New Jersey corporate business tax (CBT) and New Jersey gross income tax (GIT) that employ National Guard members or reservists who are mobilized to active duty.
  • Qualified employees are those service members who receive active-duty mobilization orders.
  • Tax administration: Implements credit calculations, ordering of credits, carryforwards, and interaction with existing tax credits.

Procedural and timeline notes

  • Introduced in the 2026 session; pre-filed for introduction.
  • Reported from Senate Committee (2nd Reading) and referred to Senate Budget and Appropriations Committee as of June 11, 2026.
  • Co-sponsors include Nilsa Cruz-Perez, Shirley Turner, and Parker Space.
  • Enactment would immediately enable the CBT credit (for privilege periods after enactment) and GIT credit (for taxable years after enactment).

Potential impact (high-level)

  • Provides a financial incentive for employers to retain and compensate National Guard and reservist employees at rates closer to their civilian salaries while they are deployed.
  • Aims to reduce employee turnover during mobilization and support employers who navigate workforce disruptions due to active duty.
  • The credits are limited to 50% of tax liability and subject to minimum tax requirements, with carryforward provisions to mitigate limitations.
  • The exact fiscal impact would depend on the number of eligible employees and the aggregate amount of wages paid to those employees during active duty periods.

Compiled from official sources — confirm details with the bill’s official record.

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