ASSEMBLY APPROPRIATIONS COMMITTEE

STATEMENT TO

[First Reprint]

SENATE, No. 192

with Assembly committee amendments

STATE OF NEW JERSEY

DATED: DECEMBER 11, 1997

      The Assembly Appropriations Committee reports favorably Senate Bill No. 192 (1R), with committee amendments.

      Senate Bill No. 192, as amended, modifies the New Jersey Gross Income Tax Act (specifically N.J.S.A.54A:6-10) to increase the amount of certain retirement income a person 62 years of age or older, or a disabled individual eligible for federal Social Security benefits, would be able to exclude from gross income. The excludable amounts will be increased from $10,000 to $20,000 for a married couple filing jointly, from $5,000 to $10,000 for a married person filing separately, and from $7,500 to $15,000 for an individual filing as a single taxpayer, in equal increments over a period of four years commencing with taxable years beginning on or after January 1, 1998.

      Currently, a person 62 years of age or older, or a disabled individual eligible for federal Social Security benefits, may exclude only up to $10,000 in retirement income if married and filing jointly, $5,000 if married but filing separately, or $7,500 if filing as a single taxpayer. Excludable retirement income includes such items as payments upon an annuity, endowment or life insurance contract, pension, disability or retirement benefit payments from a private or public plan, or Individual Retirement Account withdrawals.

      In addition, N.J.S.A.54A:6-15 is amended to increase the excludable amounts of other retirement income to match the levels in section 1 of the bill. Currently, N.J.S.A.54A:6-15 permits the exclusion from gross income of other retirement income, such as interest and dividend earnings from investments, but only if the taxpayer has less than $3,000 in income from such sources as a salary or wage, net profit from a business, or distribution of partnership income or net share of S corporation income. The above restriction is retained by the bill, as well as the restriction that limits the total amount of income excludable under both N.J.S.A.54A:6-10 and N.J.S.A.54A:6-15 to the amounts set forth in the latter.

      This bill as amended is identical to the ACS for A-1899/896 reported by this committee.

FISCAL IMPACT:

      In the fiscal note, the Office of Legislative Services (OLS) estimates that this bill will result in a revenue loss to the State of $14.2 million in Fiscal Year 1998, $23.7 million FY 1999 and $33.6 million in FY 2000. These were based on information compiled by the Division of Taxation, but prior to these committee amendments.

COMMITTEE AMENDMENTS:

      The committee amended the bill to provide for the phase-in to commence January 1, 1998. It is not possible at this time to allow the legislation to begin to apply to income received during taxable year 1997.