As Inflation Skyrockets, This NJ Bill Aims To Prevent Hidden Tax Hikes

A new bill that would help prevent tax hikes as inflation rises has been introduced to the Senate.

Senate Republican Leader Anthony M. Bucco (R-Morris, Passaic) has introduced bipartisan legislation that would index New Jersey’s gross income tax brackets annually for inflation, consistent with the federal government’s policies.

As inflation hits 3.8 percent, the highest it’s been since 2023, many salaried or fixed-income residents may see an increase in funds to account for rising costs. However, this could propel them into another tax bracket, effectively forcing them to pay more in taxes while having the same buying power as before.

In other words, if someone with an $80,000 salary gets a cost-of-living raise of $4,000, they may be put into a different tax bracket. But with inflation raising prices of groceries, gas, and other essentials, their buying power remains the same, but their taxes go up. This is often referred to as a "stealth tax increase” or “tax bracket creep.”

What Bill S2370 would do is have tax brackets themselves rise with inflation, using the Consumer Price Index (CPI) — the federal inflation measure — to recalculate the tax bracket thresholds.

“Families are doing everything right and still falling further behind because inflation and high taxes continue driving up the cost of everyday life,” said Bucco. “We cannot control every national or global economic force impacting prices, but we can control how Trenton responds… Indexing our tax brackets is a long-overdue, commonsense step to help New Jersey families keep more of their hard-earned paychecks.”

Bucco has been petitioning for the bill since 2016. It was introduced at the start of the 2026-2027 legislative session and was referred to the Senate Budget and Appropriations Committee, where it is awaiting a hearing and vote.