This bill proposes to exclude tips from the calculation of gross income for state income tax purposes in New Jersey. Currently, gross income includes various forms of remuneration such as salaries, wages, and tips. The bill amends N.J.S.54A:5-1 by deleting the reference to tips as part of gross income and inserting language that specifies tips received for services rendered, whether in cash or property, will be treated as property acquired by gift and thus excluded from gross income.

Additionally, the bill amends N.J.S.54A:6-5 to clarify that tips are to be considered as property acquired by gift, further solidifying their exclusion from taxable income. This change aims to alleviate the tax burden on individuals who earn tips, aligning their treatment with other forms of income that are not subject to gross income tax. The bill is set to take effect immediately and will apply to taxable years beginning on or after January 1 of the year following its enactment.

Statutes affected:
Introduced: 54A:5-19