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S3689
SENATE, No. 3689
STATE OF NEW JERSEY
222nd LEGISLATURE
�
INTRODUCED FEBRUARY 24, 2026
Sponsored by:
Senator� ANTHONY M. BUCCO
District 25 (Morris and Passaic)
Co-Sponsored by:
Senators Space and Holzapfel
SYNOPSIS
���� Expands eligibility for pension and retirement income
exclusion to taxpayers with incomes exceeding $150,000, and increases amount of
exclusion that qualifying taxpayers may claim.
CURRENT VERSION OF TEXT
���� As introduced.
��
An Act
expanding eligibility for the pension and retirement
income exclusion under the gross income tax and increasing the amount of the
exclusion, and amending N.J.S.54A:6-10 and P.L.1977, c.273.
����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:
���� 1.��� N.J.S.54A:6-10 is
amended to read as follows:
���� 54A:6-10.� Pensions and
annuities.
���� a.���� Gross income shall not
include that part of any amount received as an annuity under an annuity,
endowment, or life insurance contract which bears the same ratio to such amount
as the investment in the contract as of the annuity starting date bears to the
expected return under the contract as of such date. Where (1) part of the
consideration for an annuity, endowment, or life insurance contract is
contributed by the employer, and (2) during the three-year period beginning on
the date on which an amount is first received under the contract as an annuity,
the aggregate amount receivable by the employee under the terms of the contract
is equal to or greater than the consideration for the contract contributed by
the employee, then all amounts received as an annuity under the contract shall
be excluded from gross income until there has been so excluded an amount equal
to the consideration for the contract contributed by the employee.
���� b.��� (1)� In addition to that
part of any amount received as an annuity which is excludable from gross income
as herein provided, gross income shall not include payments:
���� 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 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, 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, 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, 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,
but before the January 1 immediately following the
date of enactment of P.L.��� , c.�� (pending before the Legislature as this
bill),
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,
but before the January 1 immediately following the
date of enactment of P.L.��� , c.��� (pending before the Legislature as this
bill),
for a taxpayer with gross income in excess of $100,000, but not more
than $125,000, 50 percent of payments for a married couple filing jointly, 25
percent of payments for a married couple filing separately, or 37.5 percent of
payments 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,
but before the January 1 immediately following the
date of enactment of P.L.��� , c.��� (pending before the Legislature as this
bill),
for a taxpayer with gross income in excess of $125,000, but not more
than $150,000, 25 percent of payments for a married couple filing jointly, 12.5
percent of payments for a married couple filing separately, or 18.75 percent of
payments 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 the January 1 immediately following the date of enactment of
P.L.��� , c.��� (pending before the Legislature as this bill), of up to
$150,000 plus 50 percent of payments in excess of $150,000 and less than or
equal to $300,000
,
���� which are received as an
annuity, endowment or life insurance contract, or payments of any such amounts
which are received as pension, disability, or retirement benefits, under any
public or private plan, whether the consideration therefor is contributed by
the employee or employer or both, by any person who is 62 years of age or older
or who, by virtue of disability, is or would be eligible to receive payments
under the federal Social Security Act.
���� (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,
but before the January 1 immediately following the
date of enactment of P.L.��� , c.��� (pending before the Legislature as this
bill),
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.
���� c.���� Gross income shall not
include any amount received under any public or private plan by reason of a
permanent and total disability.
���� d.��� Gross income shall not
include distributions from an employees' trust described in section 401(a) of
the Internal Revenue Code of 1986, as amended (hereinafter referred to as
"the Code"), which is exempt from tax under section 501(a) of the Code
if the distribution, except the portion representing the employees'
contributions, is rolled over in accordance with section 402(a)(5) or section
403(a)(4) of the Code. The distribution shall be paid in one or more
installments which constitute a lump-sum distribution within the meaning of
section 402(e)(4)(A) (determined without reference to subsection (e)(4)(B)), or
be on account of a termination of a plan of which the trust is a part or, in
the case of a profit-sharing or stock bonus plan, a complete discontinuance of
contributions under such plan.
(cf: P.L.2021, c.129, s.1)
���� 2.��� 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,
but before the January 1 immediately following the
date of enactment of P.L.��� , c.��� (pending before the Legislature as this
bill),
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,
but before the January 1 immediately following the
date of enactment of P.L.��� , c.��� (pending before the Legislature as this
bill),
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,
but before the January 1 immediately following the
date of enactment of P.L.��� , c.��� (pending before the Legislature as this
bill),
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
;
����
for taxable years beginning
on or after the January 1 immediately following the date of enactment of
P.L.��� , c.��� (pending before the Legislature as this bill), of up to
$150,000 plus 50 percent of payments in excess of $150,000 and less than or
equal to $300,000
,
���� 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,
but before the January 1 immediately following the
date of enactment of P.L.��� , c.��� (pending before the Legislature as this
bill),
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.
(cf: P.L.2021, c.129, s.2)
���� 3.��� This act shall take
effect immediately.
STATEMENT
���� This bill expands eligibility
for the partial gross income tax exclusion on pension and retirement income to
certain taxpayers with gross incomes exceeding $150,000, and increases the
amount of the exclusion that qualifying taxpayers may claim.
���� Under current law, qualifying
taxpayers with $150,000 or less in gross income who are at least 62 years old
or disabled may exclude certain pension and retirement income from taxable
gross income, up to a certain amount, depending on filing status.� The bill
expands eligibility for the exclusion to qualifying taxpayers with incomes in
excess of $150,000, so that all qualifying taxpayers may claim a full or
partial exclusion, regardless of income.
���� The bill also increases the
amount of the pension and retirement and income exclusion by allowing
qualifying taxpayers to exempt the first $150,000 of pension payments and other
retirement income as well as 50 percent of any payments exceeding $150,000 up
to $300,000 during a taxable year.� A taxpayer would not be permitted to claim
an exemption for any payments exceeding $300,000.
���� Under current law, a
qualifying taxpayer with an annual income of $100,000 or less is allowed an
exclusion as follows:
Filer Type
Amount of Exclusion
Married filing jointly
Up to $100,000
Married filing separately
Up to $50,000
Single
Up to $75,000
���� For a qualifying taxpayer
whose income exceeds $100,000 but is less than or equal to $125,000, current
law allows the taxpayer to claim an exclusion from gross income as follows:
Filer Type
Amount of Exclusion
Married filing jointly
50 percent of pension payments
and other retirement income
Married filing separately
25 percent of pension payments
and other retirement income
Single
37.5 percent of pension payments
and other retirement income
���� For
a qualifying taxpayer whose income exceeds $125,000 but is less than or equal
to $150,000, current law allows the taxpayer to claim an exclusion from gross
income as follows:
Filer Type
Amount of Exclusion
Married filing jointly
25 percent of pension payments
and other retirement income
Married filing separately
12.5 percent of pension payments
and other retirement income
Single
18.75 percent of pension payments
and other retirement income