The Division of Taxation has explained the effect of changes made by the federal Tax Relief Act of 2010 (TRA) (P.L. 111-312) on New Jersey gross (personal) income tax, including the extension of bonus depreciation and increased small business expensing, the temporary increase of IRC §179 expensing to 100%, and the extension of enhanced charitable contributions.

Bonus Deprecation and IRC §179

The TRA extended the bonus depreciation amount from the Small Business Jobs Act of 2010 through the 2011 tax year and increased the bonus depreciation allowable from 50% to 100%. It also extended the 50% bonus depreciation provision through the 2012 tax year. Because New Jersey decoupled from federal bonus depreciation as of January 1, 2004, the state does not conform to the provisions of the TRA related to bonus depreciation. Adjustments are made on Form GIT-DEP ( Gross Income Tax Depreciation Adjustment Worksheet), which is available at http://www.state.nj.us/treasury/taxation/pdf/other_forms/tgi-ee/gitdep.pdf.

New Jersey also does not conform to the TRA deduction limit and phase-out provisions under IRC §179. For New Jersey personal income tax purposes, the deduction limit and phase-out are the same as under IRC §179 in effect on December 31, 2002. The deduction continues to be limited to $25,000. The IRC §179 adjustments are also made on Form GIT-DEP.

Enhanced Charitable Contributions

For New Jersey personal income tax purposes, only qualified conservation contributions, as defined under IRC §170(h), of qualified real property interests in property located in the state are allowable. Therefore, other sections of IRC §170 that were extended by the TRA are not allowable for New Jersey personal income tax purposes.