Allows gross income tax deduction for employees for amounts paid by employers for certain educational assistance programs for employees and for employee's student loans.

A2337

ASSEMBLY, No. 2337

STATE OF NEW JERSEY

222nd LEGISLATURE

�

PRE-FILED FOR INTRODUCTION IN THE 2026 SESSION

Sponsored by:

Assemblyman WILLIAM F. MOEN, JR.

District 5 (Camden and Gloucester)

Assemblyman LOUIS D. GREENWALD

District 6 (Burlington and Camden)

SYNOPSIS

���� Allows gross income tax deduction for employees for
amounts paid by employers for certain educational assistance programs for
employees and for employee's student loans.

CURRENT VERSION OF TEXT

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

��

An Act
allowing a deduction from employees gross income of
amounts paid by employers for certain educational assistance programs for
employees and for employee�s student loans, supplementing Title 54A of the New
Jersey Statutes.

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

���� 1.��� A taxpayer may deduct
from the taxpayer's gross income an amount equal to the amounts paid or
expenses incurred by the employer of the taxpayer for the taxable year for
education assistance to the taxpayer as an employee of the employer during that
taxable year up to the amount of $5,250 that is allowed to be excluded for the
taxable year from the taxpayer�s computation of federal taxable income for
federal income tax purposes pursuant to section 127 of the federal Internal
Revenue Code of 1986, 26 U.S.C. s.127.� The deduction allowed pursuant to this
section may be in addition to all other exemptions and deductions allowed the
taxpayer for the taxable year including the deduction allowed pursuant to
section 2 of P.L.��� , c.���� (C.��������� ) (pending before the Legislature as
this bill).

���� 2.��� a.� A taxpayer may
deduct from the taxpayer�s gross income an amount equal to amounts paid or
expenses incurred by the employer of the taxpayer for the taxable year for qualified
student loan payment assistance to the taxpayer as an employee of the employer
during that taxable year up to the amount of $5,250.

���� b.��� As used in this section:

���� �qualified student loan
payment assistance� means amounts paid or incurred by an employer under a plan
for the exclusive benefit of the employees of the employer to provide those
employees with student loan payment assistance;

���� �student loan payment
assistance� means the payment of principal or interest on any indebtedness
incurred by an employee for qualified higher education expenses incurred by the
employee for education furnished to the employee, and any indebtedness used to
refinance that indebtedness; and

���� �qualified higher education
expense� means the cost of attendance as defined in section 472 of the federal
�Higher Education Act of 1965,� Pub.L.89 329 (20 U.S.C. s.1087ll).

���� c.���� The deduction allowed
pursuant to this section may be in addition to all other exemptions and
deductions allowed the taxpayer for the taxable year including the deduction
allowed pursuant to section 1 of P.L.��� , c.���� (C.��������� ) (pending
before the Legislature as this bill).

�

���� 3.��� This act shall take
effect immediately and sections 1 and 2 shall apply to taxable years beginning
after the date of enactment.

STATEMENT

���� This bill allows a gross
income tax deduction for employees for amounts paid by employers for certain
educational assistance programs for employees and for employee�s student loans.�
Making these forms of employer-provided assistance tax free under the New
Jersey gross income tax can incentivize employers and employees to establish
programs that provide a personal �financial wellness� benefit to employees
without actually raising taxable salaries and wages.� These forms of tax-free
assistance can aid employees in meeting their current costs of pursuing their
higher education goals while they hold a job, and can also help address high
student debt burdens facing the college-educated workforce.

���� The deduction for certain
educational expenses incurred pursuant to an educational assistance program
will have to meet the requirements under the federal income tax exclusion
allowed under section 127 of the federal Internal Revenue Code.� The New Jersey
gross income deduction for employees will be limited to the $5,250 annual limit
under the federal income tax exclusion.� Tax-free educational assistance
provided by an employer includes payments for tuition, fees, textbooks, and
equipment.� To qualify, the courses need not be work-related or be part of a
degree program but cannot involve sports, games, or hobbies.� The educational
assistance program must be set out in a written plan offered by the employer.
Payments for educational assistance compensate the employee for costs of
certain coursework undertaken by the employee while employed by the employer,
as opposed to student loan debt that the employee had already accrued.

���� Amounts paid by an employer
toward an employee�s student loan debt are taxable compensation for federal
income tax purposes, and are taxable under the New Jersey gross income tax as taxable
�salaries, wages, tips, fees, commissions, bonuses, and other remuneration
received for services rendered.�� The New Jersey gross income deduction under
this bill for employer-provided student loan assistance is modeled on one of
several pending congressional bills that address student loan debt and federal
income taxation.� Under this gross income deduction, as under the federal
legislation, this assistance includes the payment of principal or interest on
student loan indebtedness incurred by an employee for higher education expenses.�
Under this bill, tax-free assistance will cover up to $5,250 of assistance in a
taxable year.

���� An employee is allowed to
deduct both forms of assistance in a taxable year, up to their combined limits,
along with other exemptions and deductions the taxpayer otherwise may be
allowed to claim under other New Jersey gross income tax provisions.