New Jersey Assembly Bill A5078

New Jersey 2022-2023 Regular Session

• Introduced: 1/19/23
• Refer: 1/19/23

Caption

Removes income-based limitations on gross income tax exclusion for pension and retirement income.

Impact

If enacted, A5078 would significantly alter the landscape of New Jersey tax regulations, impacting the state's tax revenues as broader eligibility for tax exclusions could result in a reduction of tax income from high earners who also receive pension or retirement benefits. The elimination of the $150,000 cap expands the number of taxpayers who can claim the exclusion notwithstanding their income brackets, thus potentially reducing the state’s taxable income base but aiding senior citizens and persons with disabilities during their retirement years.

Summary

Assembly Bill A5078 aims to amend the current New Jersey tax law by removing income-based limitations on the gross income tax exclusion for pension and retirement income. The bill intends to facilitate tax relief for taxpayers aged 62 and above or disabled, allowing them to exclude a greater portion of their pension and retirement income from taxable gross income. Under existing law, only taxpayers with an annual income of $150,000 or less may benefit from this exclusion, which the bill seeks to expand to all eligible taxpayers regardless of their income level.

Contention

The key points of contention surrounding A5078 involve potential debates about fairness in taxation and fiscal responsibility. Proponents argue that removing income limits allows for a fairer tax treatment of retirees who have contributed to pension plans throughout their working lives. In contrast, critics may raise concerns about the implications of reduced tax revenue on state-funded programs and services, suggesting that the financial burden could shift to other taxpayers or lead to cuts in crucial state services. Discussions will likely focus on finding a balance between providing tax relief to retirees and maintaining adequate funding for state programs.