This bill amends New Jersey's gross income tax law to exclude certain contributions made by employees of public and non-profit sectors to their retirement savings plans from gross income taxation. Specifically, it allows for tax deferrals on elective contributions to deferred compensation plans under section 457 of the federal Internal Revenue Code, as well as contributions to plans established under subsection (b) of section 403 for employees of charitable, educational, and religious organizations. The bill aims to provide similar tax incentives for retirement savings to these employees as those available to private sector employees under section 401(k) plans.

Additionally, the bill introduces a new deduction from gross income for contributions made to individual retirement accounts (IRAs) or premiums paid for individual retirement annuities that qualify for federal income tax deductions. This provision is designed to enhance retirement savings options for employees whose employers do not offer pension plans, thereby promoting financial security in retirement. The changes will take effect immediately and apply to taxable years beginning on or after January 1 following the date of enactment.

Statutes affected:
Introduced: 54A:6-21