Senators Anthony Bucco (R-Morris, Somerset) and Steven Oroho (R-Sussex, Morris, Warren) introduced legislation that will bring more fairness to New Jersey’s income tax by adjusting its tax brackets for inflation every year.
Sen. Anthony Bucco and Sen. Steven Oroho introduced legislation that will protect taxpayers from inflation changing their tax rates. (SenateNJ.com)
“This is a common-sense way to protect taxpayers from unfairly being placed into a higher tax bracket,” Senator Bucco said. “People end up paying more in taxes and aren’t able to spend as much as they used to on everyday goods and services.”
The legislation (S-2063) is identical to an Assembly bill introduced earlier this month by Assemblyman Anthony M. Bucco. It would adjust the state personal income tax brackets to reflect the price and wages increases that result from inflation. The federal income tax has been using this practice – known as indexing – since the 1980s.
When tax brackets are fixed – like they are in New Jersey – it results in what is called “bracket creep” — or an increase in effective tax rates caused by inflation. Indexing prevents this by adjusting for cost of living, based on the urban consumer price index.
“When wages increase with inflation while tax rates remain the same, your income tax bill goes up, and your purchasing power goes down,” Senator Oroho said. “We need to keep up with inflation and protect our residents from unnecessary and unfair tax raises.”
Related Facebook Post:
https://www.facebook.com/tonybucco/posts/10153372925681441
Related Tweet:
https://twitter.com/stevenoroho/status/723586826368245760
Website Post:
https://www.senatenj.com/index.php/oroho/bucco-oroho-introduce-bill-to-index-income-tax-brackets/26581
