This bill amends the New Jersey gross income tax law to include annual inflation indexing for taxable income brackets. The new provisions require the Director of the Division of Taxation to recompute the taxable income bracket amounts and tax amounts per bracket each year based on the cost-of-living adjustment, which is defined as the change in the consumer price index for all urban consumers as prepared by the U.S. Department of Labor. This adjustment aims to prevent "bracket creep," where taxpayers may find themselves in higher tax brackets due to inflation rather than actual increases in real income.

The bill also includes provisions to ensure that employers are not penalized for insufficient withholding related to the new tax rates and brackets for the taxable year 2018. It specifies that no additions to tax or penalties will be imposed for estimated tax payments that may be insufficient due to the changes in tax rates. The act is set to take effect immediately and will apply to taxable years beginning on or after January 1 of the year following its enactment.