NJBIA today is applauding the advancement of a bill that will bring New Jersey in line with most other states by allowing for a key federal tax exemption that will help encourage investment in New Jersey small businesses.

Bill A-4455 (Frieman, D-16; Schaer, D-36) allows for a deduction from New Jersey gross income of certain capital gains from sale or exchange of New Jersey qualified small business stock (QSBS) held for more than five years.

The legislation advanced today in the Assembly State and Local Government Committee, in concert with support for the measure in Gov. Phil Murphy’s FY26 budget proposal.

“NJBIA is very happy to see this bill listed in Governor Murphy’s proposed FY26 state budget, and we thank the governor and the bill’s supporters for trying to get this done as part of this budget process,” said NJBIA Chief Government Affairs Officer Christopher Emigholz.

“Ending our uncompetitive and outlier tax treatment of investments in innovative start-ups is one of the best ways to attract capital to grow jobs, our economy and our tax revenues. It’s a big win if we can get this done.”

New Jersey is currently one of five states that does not conform to federal QSBS tax standards, meaning investors in the Garden State are taxed on QSBS gains at the full state income tax rate. The federal tax code allows for a partial exclusion.

“While this legislation has stalled before, it’s time to make this exclusion provided at the federal level the law here in New Jersey,” Emigholz said. “We look forward to continuing our support of this bill to remove this competitive disadvantage from our great state.”

Earlier this month, the bill advanced unanimously in the Assembly Commerce, Economic Development and Agriculture Committee.