By Michael Salad, Esq. and Zachary Matik
On June 30, 2026, Governor Sherrill signed New Jersey’s Fiscal Year 2027 State Budget into law. The $60.7 billion spending plan includes a full pension payment, increased school funding, continued support for NJ TRANSIT, an expansion of the Child Tax Credit, and more than $6 billion in surplus reserves.
The budget package also includes supplemental legislation funding state and local priorities, including:
- Municipal aid
- 2026 FIFA World Cup-related expenses
- Additional school aid and capital funding
- Local infrastructure
- Public safety
- Economic development initiatives
- Expanded support for New Jersey’s artificial intelligence supercomputer initiative
For New Jersey businesses, the key point is that the budget package does more than fund government programs. It also includes business tax and employer-related measures that may affect planning, compliance, and the overall cost of doing business in New Jersey.
Business Tax Provisions
Earlier this year, Cooper Levenson discussed the business tax proposals contained in Governor Sherrill’s proposed FY2027 budget. Several of those proposals were enacted as part of the final FY2027 budget package.
Among other changes, the enacted budget includes:
Modifications to the Alternative Business Calculation adjustment, which reduces or eliminates the adjustment for many higher-income taxpayersafter careful legal, tax, lending, title, insurance, and contractual analysis.
A temporary $1 million cap on Corporation Business Tax net operating loss (NOL) deductions for certain privilege periods
Net Operating Loss (NOL) Deduction Cap
NOL deductions are important because they generally allow businesses to use prior losses to offset later income.
Under the enacted legislation, the temporary cap applies to certain privilege periods ending on or after July 31, 2026 and before July 31, 2030.
For businesses that have relied on prior losses as part of their tax planning, the cap may affect:
- Expected tax obligations
- Estimated payments
- Cash flow
Alternative Business Calculation Changes
The budget package also modifies the Alternative Business Calculation adjustment.
Beginning with taxable year 2026:
- The adjustment is reduced for taxpayers with gross income over $500,000.
- The adjustment is eliminated for taxpayers with gross income over $1 million.
The change may be relevant to owners of:
- Partnerships
- Limited liability companies
- S corporations
- Other pass-through entities
where business income and losses generally flow through to individual owners.
Practical Takeaway
The practical takeaway is straightforward: businesses should not assume prior tax planning will apply in the same manner going forward.
Companies and pass-through business owners should review these provisions with their tax professionals before finalizing year-end planning.
Employer Healthcare Assistance Contribution
Governor Sherrill also signed the Employer Healthcare Assistance Contribution into law.
The measure establishes an annual assessment on certain employers based on:
- The number of employees who receive health benefits coverage through the State Medicaid program, including NJ FamilyCare
- The number of employees’ dependents receiving that coverage
The amount of the assessment is determined under the statute.
For employers, the issue extends beyond the potential assessment itself.
Employers may also face additional administrative responsibilities associated with:
- Determining whether the assessment applies
- Tracking relevant information
- Complying with state reporting requirements or guidance
- Planning for added annual costs
Planning Considerations
The FY2027 budget includes investments in:
- Transportation
- Economic development
- Higher education
- Innovation
- Shared services
- Other public priorities
At the same time, employers continue to evaluate New Jersey’s overall cost of doing business.
For small and family-owned businesses, especially those competing with lower-cost neighboring states, each additional tax, assessment, or compliance obligation may affect decisions about:
- Hiring
- Investment
- Growth
What New Jersey Businesses Should Do Next
New Jersey businesses should review the FY2027 budget package carefully and consult with legal counsel, tax advisors, or other qualified professionals to determine how these provisions may affect their operations, planning, and long-term competitiveness.
Several provisions take effect beginning in 2026 and FY2027, including certain privilege periods ending on or after July 31, 2026. Businesses should review their estimated tax obligations and planning strategies promptly.
Michael Salad is an attorney in Cooper Levenson’s Business & Tax practice group. He concentrates his practice on estate and asset protection planning, probate and trust administration, special needs planning, business transactions, mergers and acquisitions and tax matters. Michael holds an LL.M. in Estate Planning and Elder Law. Michael is licensed to practice law in Florida, New Jersey, New York, Pennsylvania, Maryland, Connecticut, Georgia, Massachusetts, Alabama, Arizona, Virginia, Michigan, North Carolina, and the District of Columbia. Michael may be reached at (954) 889-1850 or via e-mail at msalad@cooperlevenson.com.
Zachary Matik is a Summer Associate at Cooper Levenson. Zach is a J.D. candidate at Elon University School of Law. He may be reached at zmatik@cooperlevenson.com.
The content of this post should not be construed as legal advice. You should consult a lawyer concerning your particular situation and any specific legal question you may have.