Effective January 1, 2022, New Jersey has revamped the timing of qualified research expense deductions for businesses claiming the Corporation Business Tax Research and Development Tax Credit.

Key Changes:

  • Same-Year Deductions: Businesses can now deduct New Jersey qualified research expenditures in the same tax year as claiming the credit, eliminating the need for amortization.
  • Recording on Tax Returns: Taxpayers will report these deductions as “other deductions” on Schedule A, Part II, streamlining the reporting process.
  • Amended Returns: Businesses that previously amortized expenses on the 2022 CBT return can file amended returns for flexibility.
  • Consistency for Non-New Jersey Expenditures: Non-New Jersey qualified research expenditures align with federal tax treatment, ensuring uniformity.
  • Cannabis Licensees: Starting January 1, 2023, cannabis licensees can deduct qualified research expenses like other taxpayers, as New Jersey decouples from restrictive cannabis-related deduction provisions.

These changes enhance simplicity and flexibility in tax compliance for businesses operating in New Jersey. Staying informed and consulting with tax professionals will help maximize the benefits of these adjustments.

For more information and tax guidance you can reach Martin D. Hauptman at (973) 243-7912 or mhauptman@mblawfirm.com