Bill Text: NJ A3812 | 2024-2025 | Regular Session | Introduced
Bill Title: Provides retirement income exclusion under gross income tax for certain persons with income over $3,000 from part-time employment.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced) 2024-02-22 - Introduced, Referred to Assembly Commerce, Economic Development and Agriculture Committee [A3812 Detail]
Download: New_Jersey-2024-A3812-Introduced.html
Sponsored by:
Assemblywoman MICHELE MATSIKOUDIS
District 21 (Middlesex, Morris, Somerset and Union)
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
As introduced.
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.
