This bill proposes a significant change to New Jersey's gross income tax structure, transitioning from a progressive tax system to a flat tax rate. Starting from taxable years beginning on or after January 1, 2026, the bill establishes a flat tax rate of 5.9 percent on 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, individuals filing as head of household, or surviving spouses. Taxpayers earning below these thresholds will be exempt from the gross income tax.

The bill also amends existing provisions regarding minimum taxable income, raising the thresholds for tax exemption. Specifically, it sets the minimum gross income for unmarried individuals and estates and trusts at $37,500, and for married couples filing jointly at $75,000. This change replaces the current progressive tax brackets, which range from 1.4% to 10.75%, and allows for a more straightforward tax calculation. The bill aims to simplify the tax process and provide clarity for taxpayers regarding their obligations.