This bill amends the New Jersey gross income tax law to increase the tax deduction available to veterans from $6,000 to $9,000. Additionally, it introduces a provision to index this deduction for inflation starting in tax year 2027. The adjustment will be based on the percentage increase in the Chained Consumer Price Index for all Urban Consumers (C-CPI-U) for the 12-month period ending August 31 of the preceding tax year, ensuring that the deduction keeps pace with inflation.

The bill specifically targets veterans who have been honorably discharged or released under honorable circumstances from active duty in the Armed Forces, a reserve component, or the National Guard of New Jersey in federal active duty status. By increasing the deduction and providing for annual adjustments, the legislation aims to provide greater financial relief to veterans when calculating their state gross income tax liability, effective for taxable years beginning on or after January 1, 2026.