SENATE BUDGET AND APPROPRIATIONS COMMITTEE

STATEMENT TO

SENATE, No. 3513

STATE OF NEW JERSEY

DATED:  JUNE 26, 2024

      The Senate Budget and Appropriations Committee reports favorably Senate Bill No. 3513.

      This bill imposes a 2.5 percent surtax, to be called the “Corporate Transit Fee,” on certain corporation business tax (CBT) taxpayers that have New Jersey allocated taxable net income in excess of $10 million for privilege periods beginning on and after January 1, 2024 through December 31, 2028.

      The bill defines “allocated taxable net income” to mean the same as the term “taxable net income” is defined in the Corporation Business Tax Act (C.54:10A-1 et seq.) for purposes of calculating a taxpayer’s CBT liability.

      The Corporate Transit Fee would be imposed in addition to the taxpayer’s regular CBT liability, except that the surtax would not be imposed on any S corporation or public utility.  No credits would be allowed against the corporate transit fee, except for credits for installment payments, estimated payments made with request for an extension of time for filing a return, or overpayments from prior privilege periods.

      All revenue collected from the Corporate Transit Fee, except for amounts constitutionally dedicated for open space, farmland, and historic preservation, would be deposited into the General Fund and, beginning in State fiscal year 2026, appropriated annually to support New Jersey Transit’s operating expenses and to pay for the State’s matching funds required to receive federal funding for eligible New Jersey Transit capital projects.

FISCAL IMPACT:

      The Office of Legislative Services (OLS) projects that the bill will result in a five year increase in State revenue collections to the General Fund of $1.1 billion in FY 2025, $815 million in FY 2026, $851 million in FY 2027, $887 million in FY 2028, and $537 million in FY 2029 from taxpayers with allocated taxable net income in excess of $10.0 million for tax years beginning on and after January 1, 2024 through December 31, 2028 under the Corporation Business Tax.

      The OLS notes that in estimating the impact of the bill, the OLS adjusted its FY 2025 and FY 2029 projections to include a catch-up payment for FY 2025 of the first two quarters of estimated payments in tax year 2024 and a reduction for FY 2029 by the first two quarters of estimated payments in tax year 2029.