New Jersey adopts optional pass-through entity level tax

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January 2020

Overview

New Jersey on January 13 enacted legislation (S3246) that allows pass-through entities to elect to pay an entity-level tax - the ‘business alternative income tax’- with an offsetting credit, for tax years beginning on or after January 1, 2020.

The takeaway

New Jersey thus joins other states in enacting some form of entity-level tax on pass-through entities intended to mitigate the impact of the state and local tax itemized deduction limitation upon individuals under the 2017 federal tax reform legislation.

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Peter Michalowski

Peter Michalowski

State and Local Tax Leader, PwC US

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