The New Jersey Business & Industry Association (NJBIA) expressed approval on Thursday for the progress of a bill aimed at aligning New Jersey's tax treatment of Qualified Small Business Stock (QSBS) with that of most other states. This legislative change is expected to incentivize investment in small businesses within the state.
Bill A-4455, sponsored by Assembly members Freiman and Schaer, proposes allowing deductions from New Jersey gross income for certain capital gains arising from the sale or exchange of QSBS held for over five years. The Assembly State and Local Government Committee unanimously released the bill, which is also supported by Governor Phil Murphy's fiscal year 2026 budget proposal.
"NJBIA is very happy to see this bill listed in Governor Murphy’s proposed FY26 state budget, and we thank the governor and the bill’s supporters for trying to get this done as part of this budget process," said NJBIA Chief Government Affairs Officer Christopher Emigholz.
He further stated, "Ending our uncompetitive and outlier tax treatment of investments in innovative start–ups is one of the best ways to attract capital to grow jobs, our economy and our tax revenues. It’s a big win if we can get this done."
Currently, New Jersey stands among five states that do not align with federal QSBS tax standards, leading to full state income tax rates on QSBS gains for investors in New Jersey. In contrast, federal law permits a partial exclusion.
"While this legislation has stalled before, it’s time to make this exclusion provided at the federal level the law here in New Jersey," Emigholz commented. "We look forward to continuing our support of this bill to remove this competitive disadvantage from our great state."
Earlier in March, Bill A-4455 advanced unanimously through the Assembly Commerce, Economic Development and Agriculture Committee.
