Inflation Could Mean Tax Breaks Under Proposed NJ Bill: Report

TRENTON, NJ — As New Jersey residents struggle with inflation, a bill moving through the state legislature could spell relief by taking rising costs into account during tax season, according to a report.

The bill, approved by the Senate Budget and Appropriations Committee last week, would adjust income thresholds for each state tax bracket based on inflation, the Asbury Park Press reported. The bill was proposed by Republican Sens. Anthony Bucco and Steven Oroho.

The senators first introduced a version of the bill in 2016 and have tried to get it passed in every session since, the Press reported.

Not every taxpayer would be affected by the bill, according to the Press. It would mainly affect taxpayers near bracket thresholds who are being pushed into higher brackets due to inflation.

While the bill's sponsors are touting the potential savings to taxpayers, critics are worried about the loss in income tax revenue and who will ultimately end up paying for it.

"I think this is a well-intended bill because we want to put more money in everyone’s pocket and to keep up with the cost of inflation and everything that’s happening around us," Senate Majority Leader Teresa Ruiz told the Press. "My concern is: Does it have an unintended consequence to a municipality that potentially is cash-strapped, or does a school budget depend on this money that gets pulled, and then that district, even though that household might be getting $100 extra for that year, then the municipality and/or the school district has to raise their tax levies?"

The bill still needs to pass the Senate and the Assembly before it can head to Gov. Phil Murphy’s desk.