Provides credits under corporation business tax and gross income tax for qualified wages of certain disabled veterans.
Summary
Assembly Bill 3631 would create temporary tax credits under both the New Jersey Corporation Business Tax and the New Jersey Gross Income Tax for employers that pay qualified wages to certain disabled veterans. The credit equals 15 percent of qualified wages, capped at $1,800 per qualified disabled veteran per taxable year or privilege period, and applies only to wages paid from January 1, 2017 through December 31, 2019. To qualify, the veteran must be a New Jersey resident, have been honorably discharged or released under honorable conditions from active service on or after January 1, 1990, and have a U.S. Department of Veterans Affairs service-connected disability rating of at least 30 percent. The veteran must also be newly hired on or after the bill’s enactment date and employed in sustained employment for at least 185 business days.
The bill includes several administrative and anti-abuse provisions. The credits cannot be claimed for wages already used to calculate another State tax credit or grant, and the Director of the Division of Taxation may deny and recapture credits, plus impose a 50 percent penalty, if an employer is found to be displacing existing workers and replacing them with qualified disabled veterans primarily to obtain the credit. For corporation business tax purposes, the credit is limited so that total credits cannot exceed 50 percent of the taxpayer’s liability and cannot reduce liability below the statutory minimum; for gross income tax purposes, the credit cannot reduce liability below zero. Unused credits may be carried forward for seven years, and eligible taxpayers may request a transferable tax credit certificate that can be sold or assigned for at least 75 percent of the credit’s value.
Impact
The bill would amend and supplement New Jersey’s corporation business tax and gross income tax laws to add a new hiring incentive targeted at employers of disabled veterans. It would create new definitions for “qualified disabled veteran,” “qualified wages,” and “sustained employment,” establish credit calculation and carryforward rules, authorize transferability of the credits, and direct the Division of Taxation to administer and police the program. Because the credit is temporary and tied to wages paid in a limited period, it would affect only employers with qualifying hires during the specified dates, while also interacting with existing tax credit limitations and minimum tax rules.
Sentiment
The bill’s stated purpose is strongly supportive of veterans and employment opportunities, and the structure of the proposal reflects a pro-hiring incentive approach. Based on the bill text and statement, the overall sentiment is favorable toward encouraging employers to hire disabled veterans, while also emphasizing safeguards to prevent misuse. No committee testimony or recorded votes were provided, so there is no additional evidence of opposition or support beyond the sponsor’s framing and the bill’s protective provisions.
Contention
The main policy concerns addressed in the bill are potential abuse and overlap with other incentives. The bill bars double-dipping with other State credits or grants, and it authorizes recapture and penalties if employers are found to be replacing existing workers solely to claim the credit. Another point that could generate discussion is the transferability feature, which allows credits to be sold or assigned for private consideration, though only at a minimum of 75 percent of face value. The bill also limits the credit to a narrow class of veterans and a short time window, which may be seen as either a targeted design choice or a limitation on broader applicability.