This bill amends New Jersey's gross income tax law to exclude deferred compensation contributions made by employees of public schools and federally tax-exempt organizations from current taxation. Specifically, it allows for tax-deferred contributions to retirement savings plans authorized under subsection (b) of section 403 of the federal Internal Revenue Code of 1986, which includes annuity contracts and mutual fund investments. The bill aims to provide the same tax incentives for retirement savings to employees of these organizations as are currently available to employees of for-profit businesses under section 401(k) of the federal tax code.

The legal language changes include the insertion of provisions that clarify the types of contributions that will be exempt from gross income taxation, specifically mentioning contributions to trusts under qualified cash or deferred arrangements and annuity contracts. The bill is designed to take effect immediately and will apply to taxable years beginning on or after January 1 following its enactment, thereby enhancing retirement savings options for employees in the specified sectors.

Statutes affected:
Introduced: 54A:6-21