A six-year old income tax reform bill accomplished something remarkable in Trenton on Monday: It got Democratic and Republican lawmakers to agree on changing your tax policy.
The state Senate Budget and Appropriations Committee approved a Republican-backed measure, S676, that’s supposed to provide relief to New Jersey workers struggling to make ends meet amid the highest inflation levels in 40 years.
The concept is simple: If inflation goes up, so would New Jersey’s income tax brackets. For many, it would mean not having to pay higher taxes if salaries go up the rate of inflation.
New Jersey uses a graduated income tax, which means residents shell out a larger percentage of earnings to the state as their incomes rise into higher tax brackets. When inflation pushes wages higher, it can often result in a net loss to workers that are pushed into higher brackets.
Author(s): Derek Hall
Publication Date: 2 Mar 2022
Publication Site: nj.com