In an effort to help small businesses that have been impacted by the COVID-19 pandemic, a bill sponsored by Assembly Democrats Gary Schaer, Gordon Johnson and Angela McKnight would allow corporations to receive a tax credit for subcontracting work to small businesses in New Jersey. The legislation was advanced by the Assembly Commerce and Economic Development Committee Monday.
“Nearly a third of all New Jersey businesses had to close for some length of time last year as a result of the pandemic, resulting in significant revenue losses and layoffs,” said Assemblyman Schaer (D-Bergen, Passaic). “If we want our small business community to survive and thrive once again, our state must help offset the impact of COVID-19. Incentivizing corporations to subcontract with small businesses is one way we can do that.”
Under the bill (A-4634), businesses subject to the corporation business tax (CBT) would be allowed to claim a tax credit equal to one percent of the amount they paid a New Jersey small business for subcontracted work performed in the state. A business must employ fewer than 50 people to qualify as a ‘small business.’
“Many small businesses are struggling to cover rent, payroll, inventory and other expenses as they deal with the effects of previous closures and ongoing COVID-19 restrictions,” said Assemblyman Johnson (D-Bergen). “Many of the products and services residents enjoy are provided by small businesses; finding ways to help them stay in business will keep them a part of our communities for years to come.”
Prior to the pandemic, small businesses employed 1.8 million people in New Jersey – nearly half of the state’s entire workforce.
“Helping small businesses is about more than just bolstering our economy, it’s also about helping countless families throughout our state,” said Assemblywoman McKnight (D-Hudson). “Driving business to these companies will help keep community members employed at a time when unemployment is at record highs. This legislation will have a very real and positive effect on the residents of New Jersey.”
The bill now heads to the Assembly Speaker for further consideration.