Contributing to a retirement plan is one of the most effective tax reduction strategies available to NJ small business owners.
SEP-IRA
Contributions up to 25% of net self-employment income, max $69,000 for 2024. Easy to set up, no annual filing. Deadline extends to tax return due date. Main drawback: must contribute same percentage for employees.
Solo 401(k)
Both employee deferrals ($23,500 for 2025) and employer contributions (up to 25%). Combined max $69,000 plus $7,500 catch-up if 50+. Employee deferral deadline is December 31.
SIMPLE IRA
For businesses with up to 100 employees. Employee contributions up to $16,500 for 2025. Employer match up to 3% or 2% non-elective. Setup deadline is October 1.
NJ State Tax Benefits
Contributions reduce both federal and NJ taxable income. At NJ’s top rate of 10.75%, state savings alone can be significant.
Disclaimer: The information provided is for general educational purposes only and does not constitute tax, legal, or investment advice. This content is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code. Tax outcomes depend on your specific facts and circumstances. Viewing this material does not create a CPA-client relationship. Personalized advice is provided only through a signed engagement letter.
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