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Anthony M. Bucco

Posted on: November 16, 2023

Bucco: IRS Adjusts Federal Tax Brackets for Inflation as NJ Hesitates

inflation

As the Internal Revenue Service (IRS) announced changes to federal income tax brackets to protect workers from inflation, Senator Anthony M. Bucco called for New Jersey lawmakers to advance his legislation to prevent tax bracket creep at the state level for New Jerseyans.

The action by the IRS to raise the income thresholds for federal tax brackets was a reminder that New Jersey is one of just a few states that doesn’t annually index our tax brackets for inflation,” said Bucco (R-25). “Unfortunately, legislation that would address this issue for state taxpayers has stalled in Trenton. If Democrats fail to take action on the tax relief I have proposed, more New Jersey families will find themselves with higher state tax bills and smaller paychecks because of inflation.”

Tax bracket creep resulting from New Jersey’s static tax rates can leave families poorer from one year to the next when cost-of-living allowances that are intended to cover inflation push workers into a higher tax bracket.

According to a new report by Rutgers University’s Center for Women & Work (CWW), all New Jersey families are still suffering from the effects of inflation, especially minority households, who often have lower average incomes and are more sensitive to price increases.

Bucco’s legislation, S-676, would index New Jersey’s gross income tax brackets annually for inflation, as has been done by the federal government for over 40 years and by most other states.

“Failure to compensate for inflation will significantly impact poorer families and small business owners with lower levels of income,” added Bucco. “All New Jersey families that are living day to day and paycheck to paycheck deserve relief. I urge my colleagues in the Legislature and the Murphy administration to work with us during lame duck to finally solve this problem for taxpayers.

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