Modifies eligibility for alternative business calculation adjustment allowed under gross income tax.

New income limits on business tax deductions

The law applies retroactively to New Jersey tax years starting on or after January 1, 2026. The alternative calculation offsets losses against gains across four covered business income categories, including allowed losses from earlier years. Alternative business losses can carry forward for up to 20 tax years after the loss year, under tax director rules. The deduction uses your business increment: regular business income minus income under the alternative calculation. You can deduct 50% of that increment from taxable income when gross income is $500,000 or less. The deduction falls to 25% when gross income is over $500,000 but no more than $1 million. No deduction is allowed when gross income exceeds $1 million. These percentages reduce taxable income, not your tax bill directly.