Provides gross income tax deduction for New Jersey fuel taxes paid through purchases of motor fuel for personal use of motor vehicles.

2026-2027 Regular Session Introduced by Tony Bucco and 2 co-sponsors

New Jersey allows a deduction on gross income tax for personal motor fuel taxes paid, up to $1,000–$2,000, with caps and eligibility limits.

Introduced in the Senate, Referred to Senate Transportation Committee

Bill Summary: S 1559 (Session 222) – New Jersey

Purpose and intent

S 1559 provides a state gross income tax deduction for New Jersey taxes paid on motor fuel purchased for the personal use of a taxpayer’s motor vehicles. The deduction is available to all filing statuses and income levels and is designed to offset the burden of fuel taxes by allowing a deduction against gross income for fuel taxes paid.

Key provisions and changes

Who may claim the deduction

Taxpayers who file as:
Married filing jointly
Married filing separately
Single
Head of household (as determined under the relevant NJ tax rules)
The deduction is based on New Jersey taxes paid on motor fuel purchases for the operation of personal-use vehicles during the taxable year.

What is deductible

The deduction equals the New Jersey taxes paid on purchases of motor fuel, including:
Petroleum Products Gross Receipts Tax (as defined in the act)
Motor Fuel Tax (as defined in the act)
The deduction is limited to taxes paid on these motor fuel purchases for personal vehicle use and is not available for fuel taxes reimbursed by an employer.

Inclusions and exclusions (situations that do not qualify)

Amounts reimbursed to the taxpayer by or for the taxpayer’s employer are not deductible.
The deduction does not apply if the fuel tax is deductible in other tax calculation contexts (e.g., business net profits, rents/royalties, partnership income, S corporation income, or certain medical expense contexts).

Dollar limits and timing

The deduction is capped at:
$1,000 for taxable years beginning on or after January 1, 2021 but before January 1, 2022
$2,000 for taxable years beginning on or after January 1, 2021
The bill applies to purchases made on or after January 1, 2021.

Effective date and applicability

Effective immediately upon enactment
Applies to motor fuel purchases made on and after January 1, 2021

Who is affected

Individual taxpayers who purchase motor fuel for personal use and pay New Jersey fuel taxes, provided the fuel taxes are not reimbursed and the purchases are not deductible through other tax provisions.

Taxpayers in all filing statuses and at any income level, up to the stated deduction caps.

Procedural and timeline notes

Introduced in January 2026 and referred to the Senate Transportation Committee.

The bill codifies a new deduction into the New Jersey Gross Income Tax Act (Title 54A), with explicit caps and limitations.

If enacted, taxpayers would claim the deduction on their New Jersey gross income tax returns for eligible tax years beginning in 2021 and onward, subject to the applicable cap for that year.

Potential impact

Provides a targeted relief for individuals paying state fuel taxes, potentially reducing overall state tax liability modestly for eligible taxpayers.

The impact depends on an individual’s fuel taxes paid and whether they are subject to any of the disqualifying deductions.