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Bill

Bill

S 4393

Excludes certain retirement savings plan contributions, withdrawals, and rollovers from gross income tax.

2024-2025 Regular Session Introduced by Tony Bucco and 1 co-sponsor

New Jersey bill excludes qualified retirement plan contributions and withdrawals from state income tax, reducing state revenue while providing tax relief primarily to higher-income savers.

Introduced in the Senate, Referred to Senate Budget and Appropriations Committee
#incometax
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WeVote Research Nonpartisan
Bill Summary · S 4393

Legislative bill overview

S 4393 would modify New Jersey's income tax treatment by excluding certain retirement savings plan contributions, withdrawals, and rollovers from taxable gross income. The bill aims to provide tax relief for residents who contribute to or withdraw from qualified retirement accounts. The specific retirement plans affected and contribution limits would be defined within the bill's language.

Why is this important

New Jersey currently taxes retirement income more heavily than many neighboring states, which can incentivize residents to relocate upon retirement. Tax-advantaged retirement savings can increase long-term financial security for middle and working-class households. However, narrowing the tax base reduces state revenue available for schools, infrastructure, and services unless paired with spending reductions or other revenue sources.

Potential points of contention

  • Revenue impact: Excluding retirement contributions and withdrawals from taxation reduces state income tax revenue, with the fiscal impact depending on plan types covered and income thresholds (if any)
  • Equity concerns: Tax benefits typically accrue more to higher-income earners who have greater capacity to save; lower-income workers may see minimal benefit
  • Definition scope: The bill's vague language ("certain" plans) leaves unclear which retirement vehicles qualify—IRAs, 401(k)s, 403(b)s, pensions—potentially requiring follow-up legislation or creating loopholes

Compiled from official sources — confirm details with the bill’s official record.

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