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A 3437

Prohibits food service establishments from using a dynamic pricing model in determining the prices on its menu

2025 Regular Session Introduced by Joe DeStefano and 2 co-sponsors

NJ tax exclusion: gains from selling private NJ employer securities to an ESOP, ESOP-owned S corp, or worker-owned cooperative, only if post-transaction ownership is at least 30%.

REFERRED TO CONSUMER AFFAIRS AND PROTECTION
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Bill Summary · A 3437

Summary of New Jersey Assembly Bill A 3437

Overview

A 3437 seeks to incentivize employee ownership by providing a gross income tax exclusion for capital gains realized from the sale of certain employer securities. The exclusion applies when a qualifying private business sells to an employee stock ownership plan (ESOP), a New Jersey S corporation owned by an ESOP, or an eligible worker-owned cooperative, with the ESOP/cooperative owning at least 30% of all outstanding employer securities after the transaction.

What the bill would do

  • Tax treatment: Gross income would not include net gains or income from the sale or exchange of employer securities of a private, non-publicly traded business (fewer than 500 employees, headquartered in NJ) to an ESOP, NJ S corporation owned by an ESOP, or an eligible worker-owned cooperative, provided the post-transaction ownership stake is at least 30%.
  • Entities covered: Applies to private businesses with headquarters/base in New Jersey, not publicly traded, and with up to 500 employees. Eligible buyers include:
    • Employee Stock Ownership Plan (ESOP)
    • New Jersey S corporation owned by an ESOP
    • Eligible worker-owned cooperative
  • Definitions: The bill defines key terms using federal code references:
    • Eligible worker-owned cooperative (as per 26 U.S.C. 1042(c)(2))
    • Employee stock ownership plan (as per 26 U.S.C. 4975(e)(7))
    • Employer securities (as per 26 U.S.C. 409)
    • Qualified business (private entity headquartered in NJ)
  • Effective date: Takes effect immediately and applies to taxable years beginning after January 1 of the year following enactment.

Fiscal impact

  • The fiscal note estimates a potential annual state revenue loss ranging from $5 million to $10 million due to the income tax exclusion. The exact impact depends on ESOP formation activity and year-to-year volume of eligible transactions.
  • The analysis notes potential indirect benefits, such as stabilized employment and broader tax revenue from sales and income taxes in future years, which may offset some losses over time.

Who is affected

  • Private NJ businesses with fewer than 500 employees.
  • Employees of these businesses who participate in ESOPs or worker-owned structures.
  • State revenue programs that rely on income tax collections.

Legislative status and history

  • Introduced: February 1, 2024
  • Current status: Referred to Consumer Affairs and Protection (as of January 27, 2025)
  • Sponsors: Primary — Angelo Santabarbara; Co-sponsors — Joe DeStefano, Karines Reyes
  • Related bills: Companion S 3214; prior-session A 9488

Notes

  • The bill emphasizes broad employee ownership without requiring employees to invest their own money, aiming to keep ownership local and preserve community business continuity.
  • A companion measure exists in the Senate (S 3214), potentially advancing in tandem with A 3437.

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

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