Bill > A977

Introduced Session

This bill indexes for inflation the taxable income brackets under the New Jersey gross income tax. This adds to the State personal income tax a common-sense taxpayer protection called inflation indexing that has been provided under the federal income tax since the 1980s. Inflation indexing means that tax brackets are revised annually to reflect nominal price and wage increases that result from inflation. When tax brackets are not indexed for inflation it results in what is called "bracket creep," which is an increase in effective tax rates caused by inflation. Higher income can bump a taxpayer into the next tax bracket, even if that higher income is merely keeping pace with inflation. A lack of inflation adjustment can also push more of a taxpayer's income into the highest bracket for which they qualify. The final result is a tax increase that occurs without any legislation being passed. Indexing addresses this by altering each bracket level each year by the level of annual inflation. Under this bill the inflation adjustment for taxable income brackets is the national consumer price index for all urban consumers as prepared by the United States Department of Labor. This is the same measure of inflation that is used for indexing the taxable income brackets under the federal Internal Revenue Code. The bill compares an annual inflation measure from the year prior to the one for which taxes will be imposed to a base year measure from the year prior to the one in which the bill is enacted. This delay allows the Director of the Division of Taxation to determine the adjusted amounts when the tax year begins.

AI Summary

Committee Categories

John DiMaio (R)*,  Nancy Muñoz (R)*,  John Azzariti (R),  Christian Barranco (R),  Robert Clifton (R),  Chris DePhillips (R),  Aura Dunn (R),  Dawn Fantasia (R),  Vicky Flynn (R),  Don Guardian (R),  Michael Inganamort (R),  Sean Kean (R),  Michele Matsikoudis (R),  Antwan McClellan (R),  Greg McGuckin (R),  Erik Peterson (R),  Brian Rumpf (R),  Alex Sauickie (R),  Gerry Scharfenberger (R),  Claire Swift (R),  Mike Torrissi (R),  Jay Webber (R), 

Introduced, Referred to Assembly Commerce, Economic Development and Agriculture Committee (on 01/09/2024)

Official Document