What percentage of tax exemption can one get by purchasing a commercial insurance for a mid-sized company in Newark, NJ?

Whether your company is based in Newark, Livingston, Montclair or anywhere else in New Jersey, it may be eligible for the CBT (corporation business tax) and Insurance Premiums Tax Credits Transfer Program. New Jersey offers tax credit certificates, that may be transferred, to businesses relocating to the state. You’ll also probably be allowed to deduct the entire cost of your commercial insurance premiums on your business or corporate tax return.

Insurance Premiums Tax Credits

Section 34:1B-120.2 of New Jersey Revised Statutes (rev. 2013) states the specifics on transferring unused insurance premium tax credit certificates by mid-sized New Jersey businesses. The interpretation and application may appear confusing to the layperson.

The bottom line: Other companies with CBTs and/or insurance premiums tax credits can "surrender" those credits for use by other corporate and insurance premiums taxpayers in New Jersey. The percentage of the tax exemption your company may receive depends on the value of the certificate you acquire and your company’s taxable net income.

Consult with your independent agent servicing Newark for valuable advice regarding your company’s ability to get and use an insurance premium tax exemption for your business. Your company can apply to the Executive Director of Labor and Workmen’s Compensation authority and the Director of the Division of Taxation for a tax credit transfer certificate.

You can receive this exemption for an amount equal to 75 percent of the amount stated on the certificate if you’re relocating to the state. You can then use the exemption to offset expenses of operating in New Jersey.

Commercial Insurance Tax Deductibility

When you purchase commercial insurance for your business, you’ll be able to deduct the premiums from your net profit before you file your taxes. Your independent agent can advise you about purchasing the right commercial insurance for your business to protect your company assets.