This bill proposes a significant change to New Jersey's gross income tax structure, transitioning to a flat tax rate of 5.9 percent for 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 bill aims to simplify the tax system by eliminating the current progressive tax brackets, which range from 1.4 to 10.75 percent based on income levels and filing status.

The bill also includes specific amendments to existing tax law, such as the deletion of previous income thresholds and the insertion of new income limits for tax exemption. For instance, it establishes that for taxable years beginning on or after January 1, 2027, individuals with gross income of $37,500 or less, and married couples with gross income of $75,000 or less, will not be subject to the tax. This change is intended to streamline tax calculations and provide clarity for taxpayers regarding their obligations under the new flat tax system. The bill is set to take effect immediately and will apply to taxable years starting on or after January 1, 2027.