Provides retirement income exclusion under gross income tax for certain persons with income over $3,000 from part-time employment.

A1259

ASSEMBLY, No. 1259

STATE OF NEW JERSEY

222nd LEGISLATURE

�

PRE-FILED FOR INTRODUCTION IN THE 2026 SESSION

Sponsored by:

Assemblyman MICHAEL INGANAMORT

District 24 (Morris, Sussex and Warren)

Co-Sponsored by:

Assemblywoman Fantasia

SYNOPSIS

���� Provides retirement income exclusion under gross
income tax for certain persons with income over $3,000 from part-time
employment.

CURRENT VERSION OF TEXT

���� Introduced Pending Technical Review by Legislative
Counsel.

��

An Act
concerning retirement income exclusions under the gross
income tax, and amending P.L.1977, c.273.

����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:

���� 1.��� Section 3 of P.L.1977,
c.273 (C.54A:6-15) is amended to read as follows:

���� 3.��� Other retirement
income.� a.� (1)� Gross income shall not include income:

���� for taxable years beginning
before January 1, 2000, of up to $10,000 for a married couple filing jointly,
$5,000 for a married person filing separately, or $7,500 for an individual
filing as a single taxpayer or an individual determining tax pursuant to subsection
a. of N.J.S.54A:2-1;

���� for the taxable year beginning
on or after January 1, 2000, but before January 1, 2001, of up to $12,500 for a
married couple filing jointly, $6,250 for a married person filing separately,
or $9,375 for an individual filing as a single taxpayer or an individual
determining tax pursuant to subsection a. of N.J.S.54A:2-1;

���� for the taxable year beginning
on or after January 1, 2001, but before January 1, 2002, of up to $15,000 for a
married couple filing jointly, $7,500 for a married person filing separately,
or $11,250 for an individual filing as a single taxpayer or an individual
determining tax pursuant to subsection a. of N.J.S.54A:2-1;

���� for the taxable year beginning
on or after January 1, 2002, but before January 1, 2003, of up to $17,500 for a
married couple filing jointly, $8,750 for a married person filing separately,
or $13,125 for an individual filing as a single taxpayer or an individual
determining tax pursuant to subsection a. of N.J.S.54A:2-1;

���� for taxable years beginning on
or after January 1, 2003, but before January 1, 2017, gross income shall not
include income of up to $20,000 for a married couple filing jointly, $10,000
for a married person filing separately, or $15,000 for an individual filing as
a single taxpayer or an individual determining tax pursuant to subsection a. of
N.J.S.54A:2-1;

���� for taxable years beginning on
or after January 1, 2017 but before January 1, 2018, gross income shall not
include income of up to $40,000 for a married couple filing jointly, $20,000
for a married person filing separately, or $30,000 for an individual filing as
a single taxpayer or an individual determining tax pursuant to subsection a. of
N.J.S.54A:2-1;

���� for taxable years beginning on
or after January 1, 2018, but before January 1, 2019, gross income shall not
include income of up to $60,000 for a married couple filing jointly, $30,000
for a married person filing separately, or $45,000 for an individual filing as
a single taxpayer or an individual determining tax pursuant to subsection a. of
N.J.S.54A:2-1; for taxable years beginning on or after January 1, 2019, but
before January 1, 2020, gross income shall not include income of up to $80,000
for a married couple filing jointly, $40,000 for a married person filing
separately, or $60,000 for an individual filing as a single taxpayer or an
individual determining tax pursuant to subsection a. of N.J.S.54A:2-1;

���� for taxable years beginning on
or after January 1, 2020, gross income shall not include income of up to
$100,000 for a married couple filing jointly, $50,000 for a married person
filing separately, or $75,000 for an individual filing as a single taxpayer or
an individual determining tax pursuant to subsection a. of

N.J.S.54A:2-1;

���� for taxable years beginning on
or after January 1, 2021, for a taxpayer with gross income in excess of
$100,000, but not more than $125,000, 50 percent of income for a married couple
filing jointly, 25 percent of income for a married couple filing separately, or
37.5 percent of income for an individual filing as a single taxpayer or
individual determining tax pursuant to subsection a. of N.J.S.54A:2-1;

���� for taxable years beginning on
or after January 1, 2021, for a taxpayer with income in excess of $125,000, but
not more than $150,000, 25 percent of gross income for a married couple filing
jointly, 12.5 percent of income for a married couple filing separately, or
18.75 percent of income for an individual filing as a single taxpayer or
individual determining tax pursuant to subsection a. of N.J.S.54A:2-1,

���� when received in any tax year
by a person aged 62 years or older who received no income in excess of $3,000
from one or more of the sources enumerated in subsections a., b., k. and p. of
N.J.S.54A:5-1.

���� (2)�� For taxable years
beginning on or after January 1, 2005, but before January 1, 2021, the
exclusion provided by this subsection shall only be allowed if the taxpayer has
gross income for the taxable year of not more than $100,000.

���� For taxable years beginning on
or after January 1, 2021, the exclusion provided by this subsection shall only
be allowed if the taxpayer has gross income for the taxable year of not more
than $150,000.

���� (3)�� The total exclusion
under this subsection and that allowable under N.J.S.54A:6-10 shall not exceed
the amounts of the exclusions set forth in this subsection.

���� b.��� In addition to the
exclusion provided under N.J.S.54A:6-10 and subsection a. of this section,
gross income shall not include income of up to $6,000 for a married couple
filing jointly or an individual determining tax pursuant to subsection a. of

N.J.S.54A:2-1, or $3,000 for a single person or a married person filing
separately, who is not covered under N.J.S.54A:6-2 or N.J.S.54A:6-3, but who
would be eligible in any year to receive payments under either section if he or
she were covered thereby.

����
c.���� (1)� For taxable
years beginning on or after the effective date of P.L.��� , c.��� (pending
before the Legislature as this bill), if a taxpayer otherwise qualifies for the
exclusion provided under subsection a. of this section, but received income in
excess of $3,000 from the sources enumerated in subsection a. of N.J.S.54A:5-1
from a position of part-time employment, then gross income shall not include an
amount, if greater than zero, equal to:

����
(a)�� the amount of the
exclusion otherwise allowed under subsection a. of this section, as determined
based on the filing status of the taxpayer; minus

����
(b)�� the product of 2,000
times the minimum wage in effect pursuant to subsection a. of section 5 of P.L.1966,
c.113

(C.34:11-56a4); and minus

����
(c)�� the amount of the
exclusion claimed by the taxpayer under N.J.S.54A:6-10 for the taxable year, if
applicable.

����
(2)�� The exclusion
provided by this subsection shall not be allowed if the taxpayer held a
position of full-time employment during the taxable year.

����
(3)�� As used in this
subsection:

����
�Full-time employment�
means employment in which a person works 30 or more hours per week during any
one-month period in the taxable year, including any form of paid time off.

����
�Part-time employment�
means employment in which a person works fewer than 30 hours per week during
any one-month period in the taxable year, including any form of paid time off.

(cf: P.L.2021, c.129, s.2)

���� 2.��� (New section)� Notwithstanding
any provision of the �Administrative Procedure Act,� P.L.1968, c.410
(C.52:14B-1 et seq.), to the contrary, the Director of the Division of Taxation
in the Department of the Treasury may, immediately upon filing with the Office
of Administrative Law, adopt rules and regulations necessary to implement the
provisions of P.L.��� , c.��� (C.������� ) (pending before the Legislature as
this bill), which shall be effective for a period not to exceed 18 months
following the date of filing and may thereafter be amended, adopted, or
readopted by the director in accordance with the requirements of P.L.1968,
c.410 (C.52:14B-1 et seq.).

���� 3.��� This act shall take
effect immediately and apply to taxable years beginning on or after the date of
enactment.

STATEMENT

���� This bill provides a
retirement income exclusion under the gross income tax for certain persons with
income over $3,000 from part-time employment.

���� Under current law, a taxpayer
with income not more than $150,000 may exclude certain pension and annuity
income from gross income for State tax purposes.� In addition, if the taxpayer
is over 62 years of age and earned not more than $3,000 in wage or business
income, then the taxpayer may also claim an exclusion for other retirement
income.� For taxpayers with income not more than $100,000, the amount of each
exclusion varies based on the taxpayer�s filing status, as follows: $100,000
for a married couple filing jointly; $50,000 for a married person filing
separately; and $75,000 for an individual filing as a single taxpayer.�
However, if a taxpayer claims both exclusions, the total value of the combined
exclusions may not exceed the amounts otherwise allowable for each separate exclusion
(e.g., $100,000, $75,000, or $50,000).

���� Under the bill, a person who
otherwise qualifies for the other retirement income exclusion (i.e., a person
aged 62 years or older and with gross income not more than $150,000), but
earned income over $3,000 from part-time wages, may also receive an exclusion
for other retirement income under the gross income tax.� The amount of the
exclusion would equal: (1) the amount of the exclusion otherwise allowed for
other retirement income, as determined based on the taxpayer�s filing status
(e.g., $100,000, $75,000, or $50,000); minus (2) the product of 2,000 times the
minimum hourly wage rate established for the taxable year (e.g., $12 in taxable
year 2021); and minus (3) the amount of the pension and annuity income
exclusion claimed by the taxpayer for the taxable year, if applicable.� For
example, a single taxpayer who is 65 years old, earns income less than
$100,000, works fewer than 30 hours a week, and does not collect pension income
would be allowed an exclusion from gross income of $26,000 in taxable year 2021
(i.e., $50,000 minus $24,000 minus $0 equals $26,000).

���� Consequently, the bill
requires the amount of the exclusion to annually decrease as the State�s
minimum hourly wage increases.� The bill also parallels existing law by
providing that the exclusion would complement, but not exceed, the amount of
the pension and annuity income exclusion that a taxpayer may claim for the
taxable year.