This bill proposes a significant change to New Jersey's gross income tax structure, establishing a flat tax rate of 5.9 percent for all taxable income exceeding $37,500 for unmarried individuals, married individuals filing separately, or estates and trusts, and $75,000 for married individuals filing jointly, heads of household, or surviving spouses. Taxpayers earning below these thresholds would be exempt from the gross income tax. The new tax structure will take effect for taxable years beginning on or after January 1, 2026.

The bill also amends existing tax law by removing the progressive tax brackets that currently range from 1.4 to 10.75 percent, which are based on filing status and income levels. Specifically, it deletes the previous income thresholds and rates, replacing them with the new flat rate. The changes aim to simplify the tax system and provide clarity for taxpayers regarding their obligations.