FISCAL NOTE
ASSEMBLY, No. 5325
STATE OF NEW JERSEY
222nd LEGISLATURE
DATED: JULY 7, 2026
SUMMARY
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Synopsis: |
Reduces business formation fees. |
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Type of Impact: |
Annual State revenue decrease |
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Agency Affected: |
Department of the Treasury |
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Fiscal Impact |
Fiscal Year 2027 |
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State Revenue Decrease |
$4.1 Million |
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Office of Legislative Services Estimate |
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Fiscal Impact |
Annual |
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State Revenue Decrease |
$4.0 Million |
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· The Office of Legislative Services (OLS) concurs with the Executive that lowering business formation fees will result in an annual State revenue loss approximating $4.1 million.
BILL DESCRIPTION
This bill lowers business formation fees by $25. The initial registration fee will decrease from $125 to $100 for for-profit businesses and from $75 to $50 for not-for-profit businesses.
FISCAL ANALYSIS
EXECUTIVE BRANCH
The Department of the Treasury estimates that this bill will reduce FY2027 State revenue collections by $4.1 million.
OFFICE OF LEGISLATIVE SERVICES
The OLS concurs with the Executive that lowering initial business registration fees by $25 per filing will result in an annual State revenue loss of about $4.1 million.
Notably, the OLS projects that the fee reduction will produce an annual State gross revenue loss of $4.2 million. This estimate is based on the U.S. Census Bureau’s monthly Business Formation Statistics for New Jersey, which indicate that New Jersey recorded 169,079 business formation applications in the most recent 12-month period available (June 2025 to May 2026).
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OLS Estimate of FY2027 Fiscal Impact of |
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State Revenue Loss from Lower Registration Fee |
($4,227,000) |
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State Revenue Offset from Lower Business Expense Deductions |
$254,000 |
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Net State Revenue Loss |
($3,973,000) |
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The State revenue loss from the fee reduction will be partially offset by a concurrent revenue gain under the gross income tax and corporation business tax, including the affiliated corporate transit fee. That is because in determining taxable income under these taxes, businesses may deduct State-imposed fees as ordinary operating expenses. Accordingly, to the extent that this bill lowers a business’ deductible expenses, it increases taxable income. The OLS estimates that the offsetting revenue gain will approximate $254,000, assuming an effective tax rate of 6.0 percent.
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Unit: |
Legislative Budget and Finance Office |
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Analyst: |
Revenue and Economic Policy Analyst |
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Approved: |
Thomas Koenig Legislative Budget and Finance Officer |
This fiscal note has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).