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Current State & Local Tax (SALT) Developments

States are mixing tax incentives for local businesses with stepped up tax enforcement on non-residents

New Jersey State tax incentives

A job creation incentive has been enacted to run through 2010. It is open to companies that are at least two years old, with at least five full-time employees and that provide health benefits to workers. The benefit is $3,000 for each new job they create. A sales tax benefit was also enacted allowing sales tax reimbursement on capital purchases of $5,000 or more including items such as computer equipment and leasehold improvement (construction) expenses.

New legislation extends the New Jersey net operating loss carry-forward from seven to 20 years, bringing New Jersey law into conformity with the federal tax code and the tax codes of many other states. This benefit is particularly valuable to fast-growth and high-tech businesses that inevitably sustain significant losses in the initial years of start-up that can take years to recoup.

New York repeals "temporary stay" rule

The old rule, allowing "in-pats" (foreign employees working in the States) to live temporarily in New York for a limited corporate purpose and to pay tax as a non-resident, has been repealed retroactively to January 1, 2008. This change will cost foreign employers additional New York State and City taxes to relocate key executives.