A5551

An Act concerning tax credits for small businesses that advertise with local news organizations, and supplementing P.L.1945, c.162 (C.54:10A-1 et seq.) and Title 54A of the New Jersey Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. a. A taxpayer that is a small business shall be allowed a credit against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), in accordance with the following schedule, for the qualifying local media advertising expenses paid by the taxpayer during the privilege period:

(1) for privilege periods beginning on or after January 1, 2027, but before January 1, 2028, the amount of the credit shall be equal to 80 percent of the qualifying local media advertising expenses paid by the taxpayer during the privilege period, not to exceed $5,000 per privilege period; and

(2) for privilege periods beginning on or after January 1, 2028, the amount of the credit shall be equal to 50 percent of the qualifying local media advertising expenses paid by the taxpayer during the privilege period, not to exceed $2,500 per privilege period.

b. To claim the credit allowed pursuant to this section, a taxpayer shall attach to any return which the taxpayer is required to file under P.L.1945, c.162 (C.54:10A-1 et seq.) such documentation as the director shall require to verify each expense for which a credit is claimed during the privilege period.

c. The order of priority of the application of the credit allowed pursuant to this section, and any other credits allowed by law against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), shall be prescribed by the director. The amount of the credit applied under this section against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) for a privilege period, together with any other credits allowed by law, shall not reduce the tax liability to an amount lower than the statutory minimum provided in subsection (e) of section 5 of P.L.1945, c.162 (C.54:10A-5). The amount of the credit otherwise allowable under this section which cannot be applied for the privilege period due to the limitations of this subsection or under other provisions of P.L.1945, c.162 (C.54:10A-1 et seq.) may be carried forward, if necessary, to the five privilege periods following the privilege period for which the credit was issued, after which the credit shall expire.

d. As used in this section:

“Local news journalist” means any individual who regularly gathers, prepares, produces, collects, edits, photographs, records, directs the recording of, writes, presents, or reports news or information that concerns local events or other matter of local public interest.

“Local newspaper” means any print or digital publication for which: the primary content of the publication is original content derived from primary sources and relating to news and current events in New Jersey; the publication primarily serves the needs of a regional or local community in this State; and the publisher of the publication is a qualified publisher that employs at least one full-time local news journalist who resides in the State and employs not more than 750 employees, of which greater than half are employed in New Jersey.

“Qualifying local media advertising expenses” means any trade or business expense deductible under section 162 of the federal Internal Revenue Code of 1986 (26 U.S.C. s.162) for advertising in a local newspaper or advertising on any broadcast radio or television station licensed by the Federal Communications Commission to serve a local community. Qualifying local media advertising expenses shall include, but not be limited to, sponsorships with a local newspaper, broadcast radio, or television station.

“Qualified publisher” means any publisher, except:

(1) an organization described in paragraph (4), (5), or (6) of subsection (c) of section 501 of the federal Internal Revenue Code of 1986 (26 U.S.C. s.501), or an organization controlled by such organization;

(2) a political organization, as defined in subsection (e) of section 527 of the federal Internal Revenue Code of 1986 (26 U.S.C. s.527), or an organization controlled by such organization; or

(3) any organization that received more than $100,000 in the aggregate from organizations described in paragraph (4), (5), or (6) of subsection (c) section 501 of the federal Internal Revenue Code of 1986 (26 U.S.C. s.501) and subsection (e) of section 527 of the federal Internal Revenue Code of 1986 (26 U.S.C. s.527).

“Small business” means any business which has its principal place of business in this State, is independently owned and operated, and employs the equivalent of fewer than 50 full-time employees during the privilege period for which a credit is claimed pursuant to this section.

2. a. A taxpayer that is a small business shall be allowed a credit against the tax otherwise due under the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq., in accordance with the following schedule, for the qualifying local media advertising expenses paid by the taxpayer during the taxable year:

(1) for taxable years beginning on or after January 1, 2027, but before January 1, 2028, the amount of the credit shall be equal to 80 percent of the qualifying local media advertising expenses paid by the taxpayer during the taxable year, not to exceed $5,000 per taxable year; and

(2) for taxable years beginning on or after January 1, 2028, the amount of the credit shall be equal to 50 percent of the qualifying local media advertising expenses paid by the taxpayer during the taxable year, not to exceed $2,500 per taxable year.

b. To claim the credit allowed pursuant to this section, a taxpayer shall attach to any return which the taxpayer is required to file under the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq., such documentation as the director shall require to verify each expense for which the credit is claimed during the taxable year.

c. The order of priority of the application of the credit allowed pursuant to this section, and any other credits allowed by law against the tax imposed pursuant to the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq., for a taxable year, shall be as prescribed by the director. The amount of the credit applied under this section against the tax imposed pursuant to N.J.S.54A:1-1 et seq. for a taxable year, together with other payments, credits, deductions, and adjustments allowed by law, shall not reduce a taxpayer’s tax liability to an amount less than zero. The amount of the credit otherwise allowable under this section which cannot be applied for the taxable year due to the limitations of this subsection or under other provisions of N.J.S.54A:1-1 et seq. may be carried forward, if necessary, to the five taxable years following the taxable year for which the credit was issued, after which the credit shall expire.

d. (1) A business entity that is classified as a partnership for federal income tax purposes shall not be allowed a credit pursuant to this section directly, but the amount of tax credit of a taxpayer in respect to a distributive share of entity income shall be determined by allocating to the taxpayer that proportion of the tax credit acquired by the entity that is equal to the taxpayer’s share, whether or not distributed, of the total distributive income or gain of the entity for its taxable year ending within or with the taxpayer’s taxable year.

(2) A New Jersey S Corporation shall not be allowed a credit pursuant to this section directly, but the amount of the credit of a taxpayer with respect to a pro rata share of S Corporation income shall be determined by allocating to the taxpayer that proportion of the credit acquired by the New Jersey S Corporation that is equal to the taxpayer’s share, whether or not distributed, of the total pro rata share of income of the New Jersey S Corporation for its privilege period ending within or with the taxpayer’s taxable year.

e. As used in this section:

“Qualified publisher” means any publisher, except:

(2) a political organization, as defined in subsection (e) of section 527 of the federal Internal Revenue Code of 1986 (26 U.S.C. s.527), or an organization controlled by such organization; or

“Small business” means any business which has its principal place of business in this State, is independently owned and operated, and employs the equivalent of fewer than 50 full-time employees during the taxable year for which a credit is claimed pursuant to this section.

3. This act shall take effect immediately and shall apply to privilege periods and taxable years beginning on or after January 1, 2027.

STATEMENT

This bill provides corporation business tax credits and gross income tax credits to small businesses that advertise with certain local news organizations.

Under the bill, a small business is allowed a tax credit based on a percentage of its qualifying local media advertising expenses paid during a tax period. A “small business” is defined under the bill to mean any business which has its principal place of business in this State, is independently owned and operated, and employs the
equivalent of fewer than 50 full-time employees. The bill also defines “qualifying local media advertising expense” means any trade or business expense deductible under federal law for advertising in a local newspaper or advertising on any broadcast radio or television station licensed by the Federal Communications Commission to serve a local community. These expenses may also include, but are not limited to, sponsorships with a local newspaper, broadcast radio, or television station.

For tax periods beginning on or after January 1, 2027, but before January 1, 2028, a small business would be eligible for a tax credit equal to 80 percent of the qualifying local media advertising expenses paid by the business during the tax period, up to $5,000. For tax periods beginning on or after the January 1, 2028, a small business would be eligible for a credit equal to 50 percent of the qualifying local media advertising expenses paid by the business during the tax period, up to $2,500 per tax period. The taxpayer is required to also submit documentation verifying each expense for which the tax credit is claimed when the taxpayer submits their tax returns.