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A4427
ASSEMBLY, No. 4427
STATE OF NEW JERSEY
222nd LEGISLATURE
�
INTRODUCED FEBRUARY 19, 2026
Sponsored by:
Assemblyman� JOHN DIMAIO
District 23 (Hunterdon, Somerset and Warren)
Assemblyman� GERRY SCHARFENBERGER
District 13 (Monmouth)
Assemblywoman� DAWN FANTASIA
District 24 (Morris, Sussex and Warren)
SYNOPSIS
���� Indexes for inflation taxable income brackets under
New Jersey gross income tax.
CURRENT VERSION OF TEXT
���� As introduced.
��
An Act
indexing for inflation the taxable income brackets
under the New Jersey gross income tax, amending N.J.S.54A:2-1.
����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:
���� 1.��� N.J.S.54A:2-1 is amended
to read as follows:
���� 54A:2-1.���� Imposition of
tax.� There is hereby imposed a tax for each taxable year (which shall be the
same as the taxable year for federal income tax purposes) on the New Jersey
gross income as herein defined of every individual, estate or trust (other than
a charitable trust or a trust forming part of a pension or profit-sharing
plan), subject to the deductions, limitations and modifications hereinafter
provided, determined in accordance with the following tables with respect to
taxpayers' taxable income:
���� a.��� For married individuals
filing a joint return and individuals filing as head of household or as
surviving spouse for federal income tax purposes:
���� (1)� for taxable years
beginning on or after January 1, 1991 but before January
1, 1994:
If the taxable income is:���������
The tax is:
Not over $20,000.00..........����
2% of taxable income
Over $20,000.00 but not
�� over $50,000.00.............����
$400.00 plus 2.5% of the
������������������������������������������������
excess over $20,000.00
Over $50,000.00 but not
�� over $70,000.00..............���
$1,150.00 plus 3.5% of the
������������������������������������������������
excess over $50,000.00
Over $70,000.00 but not
�� over $80,000.00..............���
$1,850.00 plus 5.0% of the
������������������������������������������������
excess over $70,000.00
Over $80,000.00 but not
�� over $150,000.00.............���
$2,350.00 plus 6.5% of the
�������������������������������������������������
excess over $80,000.00
Over $150,000.00...............���
$6,900.00 plus 7.0% of the
��������������������������������������������������
excess over $150,000.00
���� (2)� for taxable years
beginning on or after January 1, 1994 but before January 1, 1995:
If the taxable income is:���������
The tax is:
Not over $20,000.00..............�
1.900% of taxable income
Over $20,000.00 but not
�� over $50,000.00................�
$380.00 plus 2.375% of the
������������������������������������������������
excess over $20,000.00
Over $50,000.00 but not
�� over $70,000.00..............���
$1,092.50 plus 3.325% of the
������������������������������������������������
excess over $50,000.00
Over $70,000.00 but not
�� over $80,000.00..............���
$1,757.50 plus 4.750% of the
������������������������������������������������
excess over $70,000.00
Over $80,000.00 but not
�� over $150,000.00.............���
$2,232.50 plus 6.175% of the
�������������������������������������������������
excess over $80,000.00
Over $150,000.00 .............����
$6,555.00 plus 6.650% of the
�������������������������������������������������
excess over $150,000.00
���� (3)� for taxable years
beginning on or after January 1, 1995 but before January
1, 1996:�
If the taxable income is:���������
The tax is:
Not over $20,000.00.............��
1.700% of taxable income
Over $20,000.00 but not
�� over $50,000.00................�
$340.00 plus 2.125% of the
������������������������������������������������
excess over $20,000.00
Over $50,000.00 but not
�� over $70,000.00..............���
$977.50 plus 2.975% of the
������������������������������������������������
excess over $50,000.00
Over $70,000.00 but not
�� over $80,000.00..............���
$1,572.50 plus 4.250% of the
������������������������������������������������
excess over $70,000.00
Over $80,000.00 but not
�� over $150,000.00.............���
$1,997.50 plus 6.013% of the
�������������������������������������������������
excess over $80,000.00
Over $150,000.00 .............���� $6,206.60 plus 6.580% of the
�������������������������������������������������
excess over $150,000.00
���� (4)� for taxable years
beginning on or after January 1, 1996 but before January
1, 2004:
If the taxable income is:���������
The tax is:
Not over $20,000.00............���
1.400% of taxable income
Over $20,000.00 but not
�� over $50,000.00................�
$280.00 plus 1.750% of the
������������������������������������������������
excess over $20,000.00
Over $50,000.00 but not
�� over $70,000.00..............���
$805.00 plus 2.450% of the
������������������������������������������������
excess over $50,000.00
Over $70,000.00 but not
�� over $80,000.00..............���
$1,295.50 plus 3.500% of the
������������������������������������������������
excess over $70,000.00
Over $80,000.00 but not
�� over $150,000.00.............���
$1,645.00 plus 5.525% of the
�������������������������������������������������
excess over $80,000.00
Over $150,000.00 .............����
$5,512.50 plus 6.370% of the
�������������������������������������������������
excess over $150,000.00
���� (5)� for taxable years
beginning on or after January 1, 2004 but before January 1, 2018:
If the taxable income is:���������
The tax is:
Not over $20,000.00 ...........���
1.400% of taxable income
Over $20,000.00 but not
�� over $50,000.00
................� $280.00 plus 1.750% of the
������������������������������������������������
excess over $20,000.00
Over $50,000.00 but not
�� over $70,000.00 .............���
$805.00 plus 2.450% of the
������������������������������������������������
excess over $50,000.00
Over $70,000.00 but not
�� over $80,000.00 .............���
$1,295.50 plus 3.500% of the
������������������������������������������������
excess over $70,000.00
Over $80,000.00 but not
�� over $150,000.00 ............���
$1,645.00 plus 5.525% of the
�������������������������������������������������
excess over $80,000.00
Over $150,000.00 but not
�� over $500,000.00 ............���
$5,512.50 plus 6.370% of the
�������������������������������������������������
excess over $150,000.00
Over $500,000.00 ............���
$27,807.50 plus 8.970% of the
�������������������������������������������������
excess over $500,000.00
���� (6)� for taxable years
beginning on or after January 1, 2018, but before January 1, 2020:
���� If the taxable income
is:��������� ��� The tax is:
���� Not over $20,000.00..........���������� 1.400%
of taxable income
� �� Over $20,000.00 but not
����������� �over $50,000.00...... ����������� $280.00
plus 1.750% of the
����������� ��������������������������������������������
����������� excess over $20,000.00
���� Over $50,000.00 but not
����������� �over $70,000.00.......
���������� $805.00 plus 2.450% of the
����������� ��������������������������������������������
����������� excess over $50,000.00
���� Over $70,000.00 but not
����������� �over $80,000.00.......
���������� $1,295.50 plus 3.500% of the
����������� ��������������������������������������������
����������� excess over $70,000.00
���� Over $80,000.00 but not
����������� �over $150,000.00..... ���������� $1,645.00
plus 5.525% of the
����������� ��������������������������������������������
����������� excess over $80,000.00
���� Over $150,000.00 but not
����������� �over $500,000.00..... ���������� $5,512.50
plus 6.370% of the
����������� ��������������������������������������������
����������� excess over $150,000.00
���� Over $500,000.00 but not
����������� �over $5,000,000.00.. ���������� $27,807.50
plus 8.970% of the
����������� ��������������������������������������������
����������� excess over $500,000.00
���� Over $5,000,000.00 ..........���������� $431,457.50
plus 10.75% of the
����������� ��������������������������������������������
����������� excess over $5,000,000.00
���� (7)� for taxable years
beginning on or after January 1, 2020:
���� If the taxable income is:�������������� The
tax is:
���� Not over $20,000.00........� ��������� 1.400%
of taxable income
���� Over $20,000.00 but not
�
����������� over $50,000.00....� ������������� $280.00
plus 1.750% of the
����������������������������������������������������������������������� excess
over $20,000.00
���� Over $50,000.00 but not
����������� over $70,000.00....����������������������������� $805.00 plus
2.450% of the excess over $50,000.00
���� Over $70,000.00 but not
����������� over $80,000.00...� ��������������������������� $1,295.50
plus 3.500% of the excess over $70,000.00
���� Over $80,000.00 but not
����������� over $150,000.00.. ��������������������������� $1,645.00 plus
5.525% of the excess over $80,000.00
���� Over $150,000.00 but not
����������� over $500,000.00.. ��������������������������� $5,512.50 plus
6.370% of the excess over $150,000.00
���� Over $500,000.00 but not
����������� over $1,000,000.00..� ���������������������� $27,807.50 plus
8.970% of the excess over $500,000.00
���� Over $1,000,000.00...������������������������������� $72,657.50 plus
10.750% of the excess over $1,000,000.00
���� b.��� For married individuals
filing separately, unmarried individuals other than individuals filing as head
of household or as a surviving spouse for federal income tax purposes, and
estates and trusts:
���� (1)� for taxable years
beginning on or after January 1, 1991 but before January 1, 1994:
If the taxable income is:���������
The tax is:
Not over $20,000.00............���
2% of taxable income
Over $20,000.00 but not
�� over $35,000.00................�
$400.00 plus 2.5% of the
������������������������������������������������
excess over $20,000.00
Over $35,000.00 but not
�� over $40,000.00................�
$775.00 plus 5.0% of the
������������������������������������������������
excess over $35,000.00
Over $40,000.00 but not
�� over $75,000.00..............���
$1,025.00 plus 6.5% of the
������������������������������������������������
excess over $40,000.00
Over $75,000.00................���
$3,300.00 plus 7.0% of the
�������������������������������������������������
excess over $75,000.00
���� (2)� for taxable years
beginning on or after January 1, 1994 but before January
1, 1995:
If the taxable income is:���������
The tax is:
Not over $20,000.00......���������
1.900% of taxable income
Over $20,000.00 but not
�� over $35,000.00.........��������
$380.00 plus 2.375% of the
������������������������������������������������
excess over $20,000.00
Over $35,000.00 but not
�� over $40,000.00................�
$736.25 plus 4.750% of the
������������������������������������������������
excess over $35,000.00
Over $40,000.00 but not
�� over $75,000.00..............���
$973.75 plus 6.175% of the
������������������������������������������������
excess over $40,000.00
Over $75,000.00...............����
$3,135.00 plus 6.650% of the
�������������������������������������������������
excess over $75,000.00
���� (3)� for taxable years
beginning on or after January 1, 1995 but before January
1, 1996:
If the taxable income is:���������
The tax is:
Not over $20,000.00.........������
1.700% of taxable income
�Over $20,000.00 but not
�� over $35,000.00................�
$340.00 plus 2.125% of the
������������������������������������������������
excess over $20,000.00
Over $35,000.00 but not
�� over $40,000.00................�
$658.75 plus 4.250% of the
������������������������������������������������
excess over $35,000.00
Over $40,000.00 but not
�� over $75,000.00..............���
$871.25 plus 6.013% of the
������������������������������������������������
excess over $40,000.00
Over $75,000.00...............����
$2,975.80 plus 6.580% of the
������������������������������������������������
excess over $75,000.00
���� (4)� for taxable years
beginning on or after January 1, 1996 but before January
1, 2004:
If the taxable income is:���������
The tax is:
Not over $20,000.00............
1.400% of taxable income
Over $20,000.00 but not
�� over $35,000.00................�
$280.00 plus 1.750% of the
������������������������������������������������
excess over $20,000.00
Over $35,000.00 but not
�� over $40,000.00................�
$542.50 plus 3.500% of the
������������������������������������������������
excess over $35,000.00
Over $40,000.00 but not
�� over $75,000.00..............���
$717.50 plus 5.525% of the
������������������������������������������������
excess over $40,000.00
Over $75,000.00...............����
$2,651.25 plus 6.370% of the
�������������������������������������������������
excess over $75,000.00
���� (5)� for taxable years
beginning on or after January 1, 2004 but before January 1, 2018:
If the taxable income is:���������
The tax is:
Not over $20,000.00 ............
1.400% of taxable income
Over $20,000.00 but not
�� over $35,000.00 ...............�
$280.00 plus 1.750% of the
������������������������������������������������
excess over $20,000.00
Over $35,000.00 but not
�� over $40,000.00 ...............�
$542.50 plus 3.500% of the
������������������������������������������������
excess over $35,000.00
Over $40,000.00 but not
�� over $75,000.00 .............���
$717.50 plus 5.525% of the
������������������������������������������������
excess over $40,000.00
Over $75,000.00 but not
�� over $500,000.00
.............��� $2,651.25 plus 6.370% of the
������������������������������������������������
excess over $75,000.00
Over $500,000.00 ...............��
$29,723.75 plus 8.970% of the
�������������������������������������������������
excess over $500,000.00
(6)������ for taxable years
beginning on or after January 1, 2018, but before January 1, 2020:
���� If the taxable income
is:��������� ��� The tax is:
���� Not over $20,000.00..........���������� 1.400%
of taxable income
�
���� Over $20,000.00 but not
����������� �over
$35,000.00........����������� $280.00 plus 1.750% of the
����������� ��������������������������������������������
����������� excess over $20,000.00
���� Over $35,000.00 but not
����������� �over
$40,000.00........����������� $542.50 plus 3.500% of the
����������� ��������������������������������������������
����������� excess over $35,000.00
���� Over $40,000.00 but not
����������� �over
$75,000.00........����������� $717.50 plus 5.525% of the
���� ��������������������������������������������
������ excess over $40,000.00
���� Over $75,000.00 but not
����������� �over $500,000.00......����������� $2,651.25
plus 6.370% of the
����������� ��������������������������������������������
����������� excess over $75,000.00
���� Over $500,000.00 but not
����������� �over $5,000,000.00...����������� $29,723.75
plus 8.970% of the
����������� ��������������������������������������������
����������� excess over $500,000.00
���� Over $5,000,000.00 ..........���������� $433,373.75
plus 10.75% of the
����������� ��������������������������������������������
����������� excess over $5,000,000.00
�(7) for taxable years beginning on
or after January 1, 2020:
���� If the taxable income is:�������������������������� The
tax is:
���� Not over $20,000.00......� ����������� 1.400%
of taxable income
���� Over $20,000.00 but not
�over $35,000.00.......��� ������������������� $280.00 plus 1.750% of the
excess over $20,000.00
���� Over $35,000.00 but not
����������� over $40,000.00......���� �������������������� $542.50 plus
3.500% of the excess over $35,000.00
���� Over $40,000.00 but not
����������� over $75,000.00......���� �������������������� $717.50 plus
5.525% of the excess over $40,000.00
���� Over $75,000.00 but not
����������� over $500,000.00...�� ����������� $2,651.25
plus 6.370% of the
����������������������������������������������������������� excess
over $75,000.00
���� Over $500,000.00 but not
����������� over $1,000,000.00..�������������� $29,723.75 plus 8.970% of
the excess over $500,000.00
���� Over $1,000,000.00....������������������ $74,573.75
plus 10.750% of the
����������������������������������������������������������� excess
over $1,000,000.00
���� c.��� For the purposes of this
section, an individual who would be eligible to file as a head of household for
federal income tax purposes but for the fact that such taxpayer is a
nonresident alien, shall determine tax pursuant to subsection a. of this
section.
���� d.��� For the purposes of this
section, for taxable year 2018, withholding by every employer from salaries,
wages and other remuneration paid by an employer for services rendered
described in subsections a. and b. of this section, in excess of $5,000,000
during that taxable year, shall be at the rate of 15.6% as soon as practicable
but no later than September 1, 2018. The Director of the Division of Taxation
is authorized to do all things necessary to implement the withholding tax
prescribed by this section for taxable year 2018.
���� e.��� No additions to tax or
penalty shall be imposed under N.J.S.54A:9-6 for insufficient payment of
estimated tax that may otherwise be due on salaries, wages and other
remuneration received before September 1, 2018, on which there is a rate of tax
imposed pursuant to subsections a. and b. of this section.
���� f.���� An employer maintaining
an office or transacting business within this State and making payment of any
salaries, wages and remuneration subject to New Jersey gross income tax or
making payment of any remuneration for employment subject to contribution under
the New Jersey "unemployment compensation law," pursuant to
R.S.43:21-1 et seq., that is subject to New Jersey gross income tax shall not
be subject to interest, penalties or other costs that may otherwise be imposed
for insufficient withholding of salaries, wages and other remuneration made
before September 1, 2018, that is directly attributable to the enactment of the
taxable income tables and tax rates in subsections a. and b. of this section.
����
g.��� The director shall
annually recompute the taxable income bracket amounts and tax amount per
taxable income bracket by multiplying each adjusted taxable income bracket
amount by the cost-of-living adjustment, and recomputing the taxable income
bracket amounts at the statutory tax rates with the recomputed bracket
amounts.� Notwithstanding the taxable income bracket amounts and tax amount per
taxable income bracket provided in the tax tables in this section, each
taxpayer shall use the adjusted taxable income bracket amounts and tax amount
per taxable income bracket as computed by the director for the applicable
taxable year.� The director shall round the recomputed taxable income bracket
amounts to the next highest multiple of $10.
����
h.��� For the purposes of
this section, "cost-of-living adjustment" means the factor calculated
by dividing the consumer price index for all urban consumers for the nation, as
prepared by the United States Department of Labor as of the close of the
12-month period ending on August 31 of the calendar year prior to the calendar
year in which the taxable year begins, by that index as of the close of the
12-month period ending on August 31 of the calendar year preceding the calendar
year in which P.L.��� , c.� ��(pending before the Legislature as this bill)
takes effect.
(cf: P.L.2020, c.94, s.17)
���� 2.��� This act shall take
effect immediately and shall apply to taxable years beginning on and after
January 1 next following the date of enactment.
STATEMENT
���� 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.