Disallows tax deduction under corporation business tax and gross income tax for punitive damages paid in connection with legal action; includes amount paid as punitive damages on behalf of taxpayer in income for tax purposes.

S 1128 (New Jersey) changes how punitive damages affect business taxes. It prohibits corporations and businesses from deducting punitive damages paid in legal settlements or judgments from their taxable income. Instead, these payments must be included as part of the business's taxable income. The law applies to all business-related punitive damages paid after its effective date (immediately upon enactment) under New Jersey's corporation business tax and gross income tax.