TRENTON – The Senate Economic Growth Committee on Monday unanimously voted to release bill S1885, which would create a new corporate tax deduction for those people or entities lending loans to business located within Urban Enterprise Zones (UEZs).
Under the bill, the lenders would not have to pay taxes on interest income earned on those loans, which bill supporters believe will encourage business growth.
At the committee hearing, Sen. Raymond Lesniak pushed for an amendment that would apply the tax credit only to “below-market loans,” which the committee supported.
Specifically, the bill permits taxpayers who are subject to the corporation business tax to deduct from their entire net income the amount of net interest received in payment of indebtedness from a qualified UEZ business that is engaged in the active conduct of trade or business within a UEZ.
The bill also permits taxpayers who are subject to the New Jersey gross income tax to deduct from their gross income an amount equal to the amount of net interest received.
The tax deductions are only good for businesses located within a UEZ and lenders do not have a financial interest in the business.
The committee also released a companion bill, S2384, which would put the deduction in place for five years.
