A 5322

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C.54:10A-4.3a
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Note
P.L.
2026, CHAPTER 21, approved June 30, 2026
Assembly, No. 5322 (First
Reprint)
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.
���� Imposes temporary $1 million cap on use of net
operating loss deductions under corporation business tax for certain privilege
periods.