Excludes deferred compensation of certain public school and federal tax-exempt organization employees from current taxation under gross income tax.
Impact
If enacted, this bill would ensure that public school employees and those working for tax-exempt organizations can utilize similar tax-deferred retirement savings options as their private sector counterparts. This move is expected to enhance the financial planning capacity of these employees, allowing them more freedom to save for retirement without facing current taxation on their contributions. By updating the tax code to include these employee groups, the state acknowledges the importance of retirement savings across various employment sectors.
Summary
Senate Bill S2565 seeks to amend New Jersey tax law by excluding certain types of deferred compensation from the state's gross income tax for employees of public schools and federally tax-exempt organizations. This allows these employees to contribute to retirement savings plans under the provisions of subsection (b) of section 403 of the federal Internal Revenue Code. The bill aims to align the tax treatment of these contributions with those already extended to employees of for-profit businesses under section 401(k).
Contention
While many support the bill as a critical step in providing equity in retirement savings options, some may argue about the implications for state revenue. Critics may express concerns that extending these tax exemptions could lead to decreased state income, which is particularly significant during budgetary constraints. Additionally, there may be discussions on how these changes fit within broader discussions about tax policy and equity amongst different professions and employment types.
Carry Over
Excludes deferred compensation of certain public school and federal tax-exempt organization employees from current taxation under the gross income tax.
Excludes deferred compensation of certain public school and federal tax-exempt organization employees from current taxation under the gross income tax.
Excludes certain contributions to deferred compensation plans and provides deduction for certain individual retirement savings under the gross income tax.
Excludes certain contributions to deferred compensation plans and provides deduction for certain individual retirement savings under the gross income tax.
Excludes under gross income tax certain contributions to qualified pension plans, deferred compensation plans and provides deduction for certain individual retirement savings.
Excludes under gross income tax certain contributions to qualified pension plans, deferred compensation plans and provides deduction for certain individual retirement savings.
Excludes certain contributions to deferred compensation plans and provides deduction for certain individual retirement savings under the gross income tax.