New Jersey A 4230: Excludes discounts for services rendered from gross income.

Bill Text

ASSEMBLY, No. 4230

STATE OF NEW JERSEY
220th LEGISLATURE

INTRODUCED JUNE 13, 2022

Sponsored by:
Assemblyman RAJ MUKHERJI
District 33 (Hudson)
Assemblywoman LISA SWAIN
District 38 (Bergen and Passaic)
Assemblywoman GABRIELA M. MOSQUERA
District 4 (Camden and Gloucester)

SYNOPSIS
Excludes discounts for services rendered from gross income.

CURRENT VERSION OF TEXT
As introduced.

A4230 MUKHERJI, SWAIN
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AN ACT excluding discounts for services rendered from gross 1
income, supplementing Title 54A of the New Jersey Statutes. 2
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BE IT ENACTED by the Senate and General Assembly of the State 4
of New Jersey: 5
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1. Gross income shall not include the amount of a qualified 7
employee discount. 8
As used in this section: 9
“Qualified employee discount” shall have the same meaning as 10
defined in subsection (c) of section 132 of the Internal Revenue 11
Code (26 U.S.C. s.132). 12
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2. This act shall take effect immediately and apply to taxable 14
years beginning on or after January 1 next following the date of 15
enactment. 16
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STATEMENT 19
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This bill provides an exclusion from the gross income tax for 21
discounts that an employee receives from an employer. 22
Currently, discounts to employees on employer sales to 23
employees are subject to tax because the discount is a form of pay 24
for the performance of services. For example, if an employer sells a 25
$50 item to an employee for $45 because the employer provides a 26
10 percent discount to employees, the $5 discounted amount would 27
be considered income for employment and would be subject to 28
income tax. 29
Under this bill, discounted amounts provided to employees will 30
not be subject to income tax if the federal tax code’s definitional 31
requirements for qualified employee discounts are met. 32
Significantly, the discount cannot exceed: in the case of property, 33
the gross profit percentage of the price at which the property is 34
being offered by the employer to customers, or in the case of 35
services, 20 percent of the price at which the services are being 36
offered by the employer to customers. 37