ASSEMBLY COMMERCE AND MILITARY AND VETERANS' AFFAIRS COMMITTEE

 

STATEMENT TO

 

ASSEMBLY, No. 1237

 

STATE OF NEW JERSEY

 

DATED: FEBRUARY 3, 1997

 

      The Assembly Commerce and Military and Veterans' Affairs Committee reports favorably Assembly Bill No. 1237.

      This bill exempts from the New Jersey gross income tax the compensation paid by the United States to resident taxpayers serving on active duty with the Armed Forces outside the United States. Currently, four states (Illinois, Michigan, Montana and Oregon) exempt all military pay, whether earned while stationed in the United States or abroad, from state income tax. Three states (Alabama, Pennsylvania and Virginia) exempt combat zone pay from income tax. Seven states (Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming) have no personal income tax. Members of the Armed Forces often change their place of residence to one of these states in order to receive favorable tax treatment. By exempting military compensation earned abroad from State income tax, this bill would encourage New Jersey residents serving in the Armed Forces to remain domiciled in this State.

      This bill was pre-filed for introduction in the 1996 session pending technical review. As reported, the bill includes the changes required by technical review which has been performed.