Division of Taxation Clarifies New Jersey Tax Impact of OBBBA
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December 1, 2025
On Dec. 1, 2025, the New Jersey Division of Taxation provided the following updates:
One Big Beautiful Bill Act (OBBBA) and the New Jersey Gross Income Tax
For Tax Years 2025 through 2028, under the One Big Beautiful Bill Act (OBBBA), there are new federal income tax deductions for senior citizens, overtime and tips. However, the New Jersey Gross Income Tax (GIT) has defined categories of income and deductions and is not computed based on federal adjusted gross income. Therefore, federal deductions under the federal OBBBA regarding overtime, tips and senior citizens do not affect a taxpayer's New Jersey Individual Income Tax return (Form NJ-1040, NJ-1040NR, or NJ-1041).
For information on New Jersey exemptions and deductions see the Division's Exemptions and Deductions webpage.
OBBBA Changes to Charitable Contribution Deductions
For purposes of the New Jersey Corporation Business Tax Act, the starting point for taxable income is entire net income before net operating losses and special deductions, with specific statutory adjustments for additions and deductions. (See N.J.S.A. 54:10A-4; N.J.A.C. 18:7-3.12.) Under the One Big Beautiful Bill Act, the federal changes to charitable contribution deductions affect the total deductions that are above the entire net income before net operating losses and special deductions.
Accordingly, New Jersey conforms to the federal changes for charitable contribution deduction to the extent they are consistent with the New Jersey Corporation Business Tax Act. For the purposes of the New Jersey Gross Income Tax Act, there is no provision similar to the Federal Internal Revenue Code allowing charitable deductions. Therefore, there are no changes for Gross Income Tax purposes.