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A 821

Allows corporation business tax credit for subcontracting work to NJ small businesses.

2026-2027 Regular Session Introduced by Vicky Flynn and 2 co-sponsors

A-821 creates a 1% corporate tax credit for payments to New Jersey small businesses (<50 employees) for subcontracted work performed in New Jersey.

Introduced, Referred to Assembly Commerce and Economic Development Committee
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WeVote Research Nonpartisan
Bill Summary · A 821

Summary: A-821 (Session 222) – New Jersey Corporate Tax Credit for Subcontracting to NJ Small Businesses

Purpose

This bill authorizes a corporate business tax (CBT) credit for taxpayers that subcontract work to New Jersey small businesses. The goal is to encourage corporations to use and support small in-state businesses by providing a tax incentive tied to subcontracting activity performed in New Jersey.

Key Provisions

  • Credit amount and base: Taxpayers with CBT liability may claim a credit equal to 1% of the amount paid to a New Jersey small business for subcontracted work performed in New Jersey during the privilege period.

  • Definition of New Jersey small business:

    • Located in New Jersey.
    • Fewer than 50 employees.
    • Must not be an affiliate, subsidiary, or under control of the taxpayer claiming the credit.

  • Definition of subcontracted work:

    • Work the taxpayer subcontracts to a New Jersey small business for performance of all or part of the taxpayer’s own contracted duties.
    • The subcontracted work must be performed in New Jersey.

  • Credit ordering and limitations:

    • The director (presumably of the Division of Taxation) will establish the order in which this credit is applied relative to other CBT credits.
    • The total credits (including this credit and any others allowed) cannot exceed 50% of the taxpayer’s CBT liability.
    • Credits cannot reduce the tax liability below the statutory minimum (as specified in the CBT statute, subsection (e) of section 5).

  • Certification procedures:

    • The director will promulgate procedures for taxpayers to certify that they qualify for the credit.

  • Effective date:

    • The act takes effect immediately and applies to privilege periods beginning after enactment.

Impact and Beneficiaries

  • Who is affected: Corporations and other taxpayers subject to New Jersey’s CBT who subcontract work to small New Jersey-based firms meeting the defined criteria.
  • Eligible subcontractors: New Jersey small businesses with fewer than 50 employees and located in New Jersey.
  • Economic impact: Expected to incentivize larger firms to source subcontracted work from small New Jersey firms, potentially increasing local contracting activity, jobs, and investment within the state.

Administrative and Procedural Notes

  • The bill assigns oversight to the director of taxation for:
    • Prioritizing the credit against other CBT credits,
    • Ensuring total credits do not exceed 50% of tax liability or drop below the CBT minimum,
    • Establishing certification procedures.

Summary in One Line

A-821 creates a 1% CBT credit for payments to New Jersey small businesses (fewer than 50 employees) for subcontracted work performed in New Jersey, with credit stacking limits, certification procedures, and immediate effectiveness for periods after enactment.

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

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