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Division of Taxation

New Jersey Decoupled from Federal Depreciation

The Business Tax Reform Act, Public Law 2002, chapter 40, was signed into law on July 2, 2002. The Act made numerous amendments to the New Jersey Corporation Business Tax. In particular, the law disallowed the use of federal bonus depreciation for privilege periods starting on and after January 1, 2002. As a result, a taxpayer is required to uncouple the federal and state depreciation claimed as a deduction in arriving at entire net income for such privilege periods. If a taxpayer claims the 30% bonus depreciation federally in an earlier privilege period when the property is placed in service, the taxpayer shall continue to do so and remains "coupled" to the federal method.

P.L. 2004, c.65, sections 24 and 26, adopted June 30, 2004, revised and extended federal bonus depreciation decoupling for Corporation Business Tax and for Gross Income Tax purposes. The gross income tax provision is effective for taxable years beginning on or after January 1, 2004. View Worksheet GIT-DED now.

Minor changes were made to the corporation business tax decoupling provision, which remains in place. For corporate purposes, the decoupling is calculated on Schedule S-Part II (B) of the corporation business tax return

This statute also decouples both taxes from the federal calculation of section IRC 179 deductions. For New Jersey purposes IRC 179 deductions are now to be calculated pursuant to the federal Internal Revenue Code in effect on December 31, 2002.

Information is provided in the applicable tax return instructions regarding decoupling bonus depreciation and section 179 deductions from federal calculations.

Last Updated: Thursday, 02/20/20