Bill Text: NJ A148 | 2024-2025 | Regular Session | Introduced
Bill Title: Permits farm income averaging credit under the New Jersey gross income tax.
Spectrum: Partisan Bill (Republican 2-0)
Status: (Introduced) 2024-01-09 - Introduced, Referred to Assembly Commerce, Economic Development and Agriculture Committee [A148 Detail]
Download: New_Jersey-2024-A148-Introduced.html
STATE OF NEW JERSEY
221st LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2024 SESSION
Sponsored by:
Assemblywoman DAWN FANTASIA
District 24 (Morris, Sussex and Warren)
Assemblyman MICHAEL INGANAMORT
District 24 (Morris, Sussex and Warren)
SYNOPSIS
Permits farm income averaging credit under the New Jersey gross income tax.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel.
An Act permitting a farm income averaging credit under the New Jersey gross income tax, and supplementing Title 54A of the New Jersey Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. A taxpayer who has farming income during a taxable year shall be allowed to claim a credit against the tax otherwise due for the taxable year pursuant to the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., in an amount as is determined pursuant to this section.
b. The credit allowed pursuant to this section shall be equal to the difference between the taxpayer's tax liability that otherwise would be determined pursuant to N.J.S.54A:1-1 et seq., and the tax liability that would be determined by substituting the farm averaging income for the farming income in the determination of the taxpayer's tax liability pursuant to N.J.S.54A:1-1 et seq., provided however, that no credit shall be allowed pursuant to this section in an amount in excess of $5,000.
c. As used in this section:
"Agricultural commodity" means plants, other than horticultural commodities, and animals, other than dogs, useful to humans, including but not limited to forages and sod crops; grains and feed crops; dairy animals and dairy products; poultry and poultry products, livestock, including beef cattle, sheep, swine, horses, ponies, mules or goats; bees and apiary products; fur animals; and trees and forest products, produced for sale.
"Base years" means the three taxable years of the taxpayer immediately prior to the taxable year for which the taxpayer is claiming the credit allowed pursuant to this section.
"Farm averaging income" means the sum of (1) the farming income reported by the taxpayer for the taxable year for which the credit is sought to be claimed, and (2) the base years' farming income, which sum is divided by four. Any taxable year within the base years in which the taxpayer reported a loss from farming income shall be considered as zero in the determination of that sum. Any taxable year within the base years in which the taxpayer does not engage in farming business shall be disregarded in the determination of "farm averaging income" and the denominator of four shall be reduced accordingly.
"Farming business"
means a trade or business conducted in this State the sole activity of which is
the cultivating of land or raising, breeding, boarding, rehabilitating,
training or grazing of any agricultural or horticultural commodity, and any of
such activity if devoted to and meeting the requirements and qualifications for
payments or other compensation pursuant to a soil conservation
program under an agreement with an agency of the federal government.
"Farming income" means the net profit or loss of a farming business in the categories of income described in subsection b., k. or p. of N.J.S.54A:5-1.
"Horticultural commodity" means fruits of all kinds, including grapes, nuts and berries; vegetables; and nursery floral, ornamental and greenhouse products, produced for sale.
d. The Director of the Division of Taxation shall adopt rules and regulations as are necessary for the implementation of this section.
2. This act shall take effect immediately and shall apply to taxable years beginning on or after January 1 next following the date of enactment.
STATEMENT
This bill provides New Jersey farmers with a credit against their annual New Jersey gross income tax determined by using income averaging (averaging out yearly gains and losses or varying levels of gains over a four-year period) from their farming business. The value of the credit is equal to the difference between a New Jersey farmer's income without four-year farming income averaging and with farming income averaging. The maximum annual credit allowed is $5,000.
Farmers are faced with a variety of risks that impact the economic viability of their farming operations. Risks associated with production, weather, financial management, marketing and labor influence the potential for success. In order to assist farmers, the federal government enacted income averaging provisions that would permit farmers to have more control over the cyclical nature of agricultural risks and even out their tax liabilities for a more secure future. This New Jersey tax credit will provide farmers with New Jersey gross income tax relief in taxable years that follow the less profitable years of their New Jersey farming business.
