501-GIT: New Jersey Gross Income Tax Domestic Production Activities Deduction (Revision 2012-11)
New Jersey · NJ Division of Taxation · Used for tax years 2025
Form 501-GIT calculates the New Jersey Domestic Production Activities Deduction for gross income tax purposes. It reports production receipts, related costs and expenses, income and wage limitations, and adjustments for activities New Jersey does not allow.
Who files this form
Use Form 501-GIT to calculate the domestic production activities deduction allowed for New Jersey gross income tax purposes.
- Each partnership or S corporation with a New Jersey filing requirement must prepare a separate Form 501-GIT.
- If the partnership or S corporation does not file a New Jersey return, the partner or shareholder calculates their deduction on Form 501-GIT using information the entity must provide.
- Prepare a separate form for each sole proprietorship, rental, lease, disposition of property, or other activity that meets New Jersey’s criteria.
The deduction is based on receipts from leasing, renting, selling, exchanging, or otherwise disposing of qualified production property manufactured or produced by the taxpayer wholly or in significant part within the United States.
What you'll need
Have the following information available to complete the form:
- The taxpayer’s name, federal EIN or Social Security number, and type of activity.
- Federal domestic production gross receipts, allocable cost of goods sold, and directly and indirectly allocable deductions, expenses, or losses for the entity or activity.
- The amounts included in that federal information that are not allowed for New Jersey purposes.
- The entity’s or activity’s net income for gross income tax purposes, before this deduction.
- W-2 wages paid to employees of the entity or activity, excluding wages for production or services that do not qualify in New Jersey.
- Federal Form 1099-PATR information, if there is a domestic production activities deduction from cooperatives.
Partners and shareholders calculating the deduction themselves need the information provided by their partnership or S corporation.
Common mistakes
- Including activities New Jersey does not allow. The deduction excludes property grown or extracted by the taxpayer; films, electricity, natural gas, potable water, computer software, or sound recordings produced by the taxpayer; construction activities; and engineering or architectural services.
- Including wages for excluded activities. Do not include wages related to production or services that do not qualify for the New Jersey deduction on line 10, Column C.
- Missing the zero-income instructions. If line 6 is zero or less, enter zero there, skip lines 7 through 11, and enter zero on line 12. If line 8 is zero or less, enter zero there, skip lines 9 through 11, and enter zero on line 12.
- Including disallowed cooperative amounts. Line 13, Column C must exclude the portion attributable to grown or extracted property or other disallowed production or services.
Questions people ask
Is the New Jersey deduction the same as the federal deduction?
No. New Jersey has uncoupled from many provisions of IRC Section 199. Column A reports federal amounts, Column B reports disallowed amounts, and Column C reports New Jersey amounts.
What income goes on line 7, Column C?
Enter the entity’s or activity’s net income as determined for gross income tax purposes, before the domestic production activities deduction.
How does the W-2 wage limit work?
Line 11 is 50% of the W-2 wages on line 10. Line 12 is the smaller of line 9 or line 11.
How is the final deduction used?
Add lines 12 and 13 in Column C to calculate line 14. The deduction is applied at the activity or entity level when determining reportable net gains or income. Partnerships and S corporations take it into account when calculating income reported on the partner’s or shareholder’s Schedule NJK-I.