Distributions and gains from a New Jersey qualified investment fund are exempt from State Income Tax if they are derived from the qualified nontaxable debt obligations held by the fund. A qualified investment fund must:
• Be a regulated investment company;
• Invest 80% or more of its funds (other than cash or receivables) in securities that are exempt from New Jersey Income Tax; and
• Complete and retain Form IF-1, Certification of Qualified Investment Fund, to document its status. This certification does not need to be filed with us, but must be made available upon request.
Distributions received by shareholders of mutual funds are subject to New Jersey Income Tax as dividends and/or capital gains, unless the fund is considered a qualified investment fund for New Jersey purposes.
To exempt a capital gains transaction from New Jersey taxation:
- Go to the New Jersey section
- Continue to Any sales of property not subject to New Jersey tax?
- Say Yes and check the Omit box for any gain or loss not subject to NJ taxation.
Learn more at Nontaxable Investment Income.
