SENATE, No. 551

STATE OF NEW JERSEY

INTRODUCED JANUARY 29, 1996

By Senator HAINES

An Act concerning the exclusion of certain income from the gross income tax for persons aged 70 years or older, 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. Gross income shall not include income of up to $10,000.00 for a married couple filing jointly, $5,000.00 for a married person filing separately, or $7,500.00 for an individual filing as a single taxpayer or an 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 but less than 70 years who received no income in excess of $3,000.00, or received in any tax year by a person aged 70 years or older who received no income in excess of the amount of income determined pursuant to section 6012 of the federal Internal Revenue Code of 1986, 26 U.S.C. §32, applicable to that person for that tax year, from one or more of the sources enumerated in subsections a., b., k., and p. of N.J.S.54A:5-1, provided, however, that 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 $6,000.00 for a married couple filing jointly or an individual determining tax pursuant to subsection a. of N.J.S.54A:2-1, or $3,000.00 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.1993, c.173, s.17)

    2. This act shall take effect immediately and shall apply to taxable years beginning on or after January 1 next following enactment.

STATEMENT

    This bill increases the amount a taxpayer aged 70 years or older may receive in the form of wages and salaries, net profits from business, partnership income or income from S corporation ownership, and remain eligible for the special "retirement" income exclusion for taxpayers who are aged 62 years and older. Taxpayers aged 62 years or older may currently exclude from gross income pension and annuity amounts equal 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; any remaining exclusion amount (in excess of pension and annuity) may be applied against other income, provided the taxpayer has no more than $3,000 of income from wages, business or partnerships. This bill provides that taxpayers aged 70 years or older may receive income from these sources up to the federal income tax return filing threshold amount and remain eligible for the excess retirement income exclusion. For tax year 1995, the federal filing threshold for a single person aged 65 years or older is $7,350; the threshold for a married couple filing jointly, both aged 65 years or older, is $13,050. The change is intended to allow senior citizens aged 70 years or older to receive additional earned income without incurring income tax liability, or experiencing a reduction in homestead property tax rebate eligibility.

Increases earned income threshold under the gross income tax exclusion for retirement and other income for persons aged 70 and older, to the federal income tax return filing threshold income amount.