Service boundary: Federal and NJ tax rules change regularly. This article is an educational checklist, not a reminder or account-monitoring service. Any mid-year tax work requires separately accepted written scope based on client-supplied facts, and no result is promised.
In This Article
- NJ BAIT Updates
- Federal Bonus Depreciation: Now Permanent Under the OBBBA
- NJ Minimum Wage Increases
- IRS Enforcement Expansion
- What Should NJ Businesses Do About These Tax Law Changes?
- Key Takeaway
- Ready to File With Confidence?
New Jersey's tax landscape for 2025-2026 includes several changes that directly affect small businesses and individuals: updated BAIT election rules, 100% federal bonus depreciation made permanent under the OBBBA (signed July 4, 2025), minimum wage increases affecting payroll costs, and expanded IRS enforcement targeting pass-through entities. NJ business owners should monitor these changes throughout the year and adjust strategies accordingly.
Tax law evolves every year. Here are the key changes for NJ small businesses and individuals. For a detailed breakdown of the NJ exit tax, see the complete NJ Exit Tax guide.
NJ BAIT Updates
The BAIT uses its own three-bracket schedule per N.J.S.A. 54A:12-3 (as amended by P.L. 2021 c.419): 5.675% on first $250,000, 6.52% on $250,001-$1,000,000, and 10.9% over $1,000,000 - separate from NJ individual gross income tax brackets. The election is still made annually, but it must be filed electronically via the NJ Division of Taxation's PTE File and Pay System before the original PTE-100 due date (March 15 for calendar-year filers) - NOT on CBT-100S or NJ-1065.
Federal Bonus Depreciation: Now Permanent Under the OBBBA
The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, made 100% federal bonus depreciation permanent for qualifying property acquired after January 19, 2025. Property acquired before January 20, 2025 remains subject to the prior TCJA phase-down when placed in service: generally 40% in 2025, 20% in 2026, and 0% thereafter. NJ does not conform to federal bonus depreciation, so NJ businesses must compute the state adjustment separately.
NJ Minimum Wage Increases
Scheduled increases affect labor costs and payroll tax calculations.
IRS Enforcement Expansion
Enforcement initiatives can increase scrutiny of pass-through entities. Businesses should retain organized records that support the positions actually reported; Monaco CPA does not provide audit-defense or audit-readiness engagements.
What Should NJ Businesses Do About These Tax Law Changes?
A client may separately request a written-scope review of specified current-year facts. Monaco CPA does not monitor accounts or deadlines, send reminders, or promise periodic meetings or a result.
Key Takeaway
Related reading: NJ BAIT Election | Quarterly Estimated Taxes in NJ | Section 179 and Bonus Depreciation in NJ | Tax preparation services
Frequently Asked Questions
What is the NJ BAIT election and has it changed for 2025?
The NJ Business Alternative Income Tax (BAIT) allows pass-through entities to pay state income tax at the entity level, enabling owners to deduct the payment as a business expense and bypass the federal SALT deduction cap ($40,000 for 2025, $40,400 for 2026 under OBBBA, increased from $10,000). The BAIT uses its own three-bracket schedule per N.J.S.A. 54A:12-3 (5.675% / 6.52% / 10.9%), separate from the individual NJ Gross Income Tax brackets. The election is made annually electronically via NJ DOT PTE File and Pay System before the original PTE-100 due date - NOT on CBT-100S or NJ-1065.
Is federal bonus depreciation still phasing down?
The OBBBA signed July 4, 2025 made 100% federal bonus depreciation permanent for qualifying property acquired after January 19, 2025. Earlier acquisitions remain on the prior phase-down (generally 40% if placed in service in 2025, 20% in 2026, and 0% thereafter). NJ does not conform to federal bonus depreciation, so NJ businesses must compute the state adjustment separately.
How does the NJ minimum wage increase affect my business?
NJ minimum wage increases affect labor costs, payroll tax calculations, and potentially overtime thresholds. Business owners should update payroll systems, review labor budgets, and consider the impact on quarterly estimated tax payments. The increases apply to most employers, with limited exceptions for seasonal and small employer categories.
Should I schedule a mid-year tax review?
It can be requested, but it is not automatic. Any mid-year analysis must be separately accepted in writing, uses client-supplied facts, and addresses only the specified questions. Monaco CPA does not monitor accounts or deadlines, recommend entity formation, send reminders, or promise tax savings.
Ready to File With Confidence?
Tax rules change frequently. Use the contact form to request a written scope; submitting it does not promise a call, engagement, or outcome. Greg Monaco is a NJ-licensed CPA and the firm's sole practitioner.