LEGISLATIVE FISCAL ESTIMATE
ASSEMBLY, No. 5433
STATE OF NEW JERSEY
220th LEGISLATURE
DATED: AUGUST 31, 2023
SUMMARY
Synopsis: Allows gross income tax deduction for union dues paid to labor
organizations.
Type of Impact: Annual State revenue loss starting in FY 2025.
Agencies Affected: Department of the Treasury.
Office of Legislative Services Estimate
Fiscal Impact Annual
State Revenue Loss Between $32.4 Million and $40.5 Million
 The Office of Legislative Services (OLS) estimates that this bill will reduce annual State
Property Tax Relief Fund revenue collections by between $32.4 million and $40.5 million
starting in FY 2025, assuming enactment of the bill in calendar year 2023. This static estimate
does not consider any possible behavior changes that the enactment of the bill may induce.
BILL DESCRIPTION
The bill allows a taxpayer to deduct from the New Jersey gross income tax any union dues paid
to labor organizations starting in the tax year beginning on January 1 following enactment.
FISCAL ANALYSIS
EXECUTIVE BRANCH
None received.
Office of Legislative Services Legislative Budget and Finance Office
State House Annex Phone (609) 847-3105
P.O. Box 068 Fax (609) 777-2442
Trenton, New Jersey 08625 www.njleg.state.nj.us
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OFFICE OF LEGISLATIVE SERVICES
The OLS projects that this bill will reduce annual State Property Tax Relief Fund collections
by between $32.4 million and $40.5 million starting in FY 2025, assuming enactment of the bill
in calendar year 2023. Calendar year 2024 contributions will then be the first to qualify for the
deduction and taxpayers will include them on gross income tax returns filed through April 15,
2025, affecting FY 2025.
While the OLS does not have granular data, the United States Department of Labor indicates
that New Jersey labor union receipts totaled over $810 million in calendar year 2022. This amount
represents the maximum that would have been tax deductible in 2022 under this bill because it
includes labor union receipts from sources other than membership dues, such as grants received
from private institutions.
Furthermore, the OLS notes that the exact State revenue loss resulting from the up to $810
million in deductible payments is difficult to forecast given the State’s gradually rising gross
income tax rate schedule and a lack of information on where union members fall on the income
spectrum. In general, a taxpayer’s marginal tax rate ranges from 0.0 percent to 10.75 percent,
depending on the taxpayer’s taxable income and filing status. As a result, the higher a taxpayer’s
income, the larger the taxpayer’s tax savings and the State’s revenue loss from the bill’s deduction.
For purposes of this estimate, the OLS assumes a range in the gross income tax rate schedule
from four percent to five percent. Therefore, the OLS calculates that the total deductible payments
would produce an annual State revenue loss ranging from $32.4 million to $40.5 million. This
estimate is static in that it does not consider any possible behavior changes that the enactment of
the bill may induce.
Office: Legislative Budget and Finance Office
Analysts: Juan C. Rodriguez
Revenue and Economic Policy Analyst
Oscar A. Mendez
Revenue and Economic Policy Analyst
Approved: Thomas Koenig
Legislative Budget and Finance Officer
This legislative fiscal estimate has been produced by the Office of Legislative Services due to the
failure of the Executive Branch to respond to our request for a fiscal note.
This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).