Bill > S127

This bill amends existing New Jersey law to clarify that certain deferred compensation arrangements for employees of public schools and federal tax-exempt organizations are not subject to immediate taxation under the state's gross income tax. Specifically, it updates references to federal tax law, ensuring that contributions made to qualified retirement plans, such as those under Section 401(k) of the Internal Revenue Code (which allows for pre-tax contributions to retirement savings), and contributions for annuity contracts under Section 403(b) of the Internal Revenue Code, are treated consistently with federal tax treatment, meaning these deferred earnings will only be taxed when they are actually received by the employee, rather than when they are contributed. This change is intended to align state tax policy with federal policy for these specific employee groups and will take effect immediately, applying to taxable years beginning on or after the first day of January following the bill's enactment.