ASSEMBLY APPROPRIATIONS COMMITTEE

STATEMENT TO

ASSEMBLY, No. 229

with Assembly committee amendments

STATE OF NEW JERSEY

DATED: NOVEMBER 6, 1997

      The Assembly Appropriations Committee reports favorably Assembly Bill No. 229, with committee amendments.

      Assembly Bill No. 229, as amended, excludes military pensions and military survivor's benefits from the New Jersey gross income tax. There are approximately 20,000 recipients of military pensions residing in New Jersey. Many of these retirees settled in New Jersey in order to take advantage of the medical care, Post Exchange privileges and camaraderie offered by the military facilities located here.

      Under this bill, New Jersey would accord recipients of military pensions the same courtesy such individuals currently enjoy in eleven other states, including New York and Pennsylvania. (Twenty additional states provide some exemptions or incentives for recipients of military pensions; nine states have no state income tax.) New Jersey residents currently receive approximately $287 million in military pensions each year. These funds contribute to the vitality of the State's economy.

FISCAL IMPACT:

      In the fiscal note to this bill, the Division of Taxation estimated an annual revenue loss in the range of $5.0 million to $5.3 million for the approximate 20,000 military pension recipients in the State of New Jersey.

COMMITTEE AMENDMENTS:

      The committee amended the bill to clarify that military survivors benefit payments are to be excluded also and change the effective date to apply to taxable years beginning on or after January 1, 1998.