Imposes gross income tax at rate of 100 percent on amounts received by resident taxpayers from Anti-Weaponization Fund.

2026-2027 Regular Session Introduced by Verlina Reynolds-Jackson

Imposes a 100% gross income tax on all amounts New Jersey residents receive from the federal Anti-Weaponization Fund, with no deductions or credits allowed.

Introduced, Referred to Assembly Oversight, Reform and Federal Relations Committee

Overview

Bill: A5196 (As introduced)

Session: 222 (New Jersey)

Jurisdiction: New Jersey

Sponsors: Assemblywoman Verlina Reynolds-Jackson; Assemblyman Ravi S. Bhalla; Assemblywoman Katie Brennan

Introduced: June 4, 2026

Purpose: Imposes a gross income tax of 100 percent on amounts received by resident taxpayers from the Anti-Weaponization Fund and eliminates deductions, exemptions, exclusions, and credits against that tax.

Key provisions

Definition of Anti-Weaponization Fund:

The fund is the program established by the U.S. Attorney General pursuant to the settlement in Donald J. Trump v. Internal Revenue Service (federal case No. 1:26-cv-20609-KMW, S.D. Fla.).

Tax treatment for resident taxpayers:

All monies received by a New Jersey resident in a taxable year from the Anti-Weaponization Fund are taxable income.
Tax rate: 100 percent of those amounts.

Deductions and credits:

No deductions, exemptions, or exclusions may be claimed against the income taxable under this section.
No tax credits may be claimed against the tax liability arising from this section.

Administration and enforcement:

The tax is to be administered, filed, collected, and enforced under the New Jersey Gross Income Tax Act (N.J.S.54A:1-1 et seq.).
All powers and authority of the Director of the Division of Taxation apply to this tax.

Effective date:

The act takes effect immediately and applies to taxable years beginning on or after January 1, 2026.

Who is affected

Resident individuals of New Jersey who receive funds from the federal Anti-Weaponization Fund.

The measure targets residents, not nonresidents, for the 100 percent taxation of those specific funds.

Recipients are responsible for complying with any applicable federal, state, and local tax requirements related to the settlement and these funds, per the bill’s accompanying explanation.

Potential impact

Revenue/tax impact:

Creates a new, flat 100 percent tax on all Anti-Weaponization Fund receipts by New Jersey resident taxpayers.
Removes all possible reductions or credits against this income, effectively making the net tax on these funds equal to the gross amount received.

Scope and policy considerations:

The bill applies retroactively to taxable years beginning January 1, 2026, and immediately (per the text), potentially affecting earlier distributions if any arise in 2026.
Substantial unilateral tax on these specific federal funds by the state, amid broader debates about state taxation of federal settlement funds.

Summary

A5196 would impose a 100 percent gross income tax on all amounts that New Jersey resident taxpayers receive from the federal Anti-Weaponization Fund, with no deductions, exemptions, exclusions, or credits allowed against that tax. The tax would be administered under the New Jersey Gross Income Tax Act and effective for taxable years beginning January 1, 2026 or immediately, per the bill’s text. Recipients would be responsible for complying with any applicable tax obligations arising from the settlement funding.

Bill