NEW JERSEY – Legislation sponsored by Senator Anthony M. Bucco that would provide necessary income tax relief for veterans was approved by the Senate Military and Veterans’ Affairs Committee.
“Veterans in New Jersey face unique financial vulnerabilities that have been compounded by years of high inflation and increased taxes,” said Bucco (R-25). “To address these challenges, we must enact measures that recognize the sacrifices made by Veterans and provide them with necessary financial relief. This legislation would index the Veteran tax exemption for inflation to put more money back into the pockets of our nation’s heroes.”
Under current law, taxpayers can reduce their gross income by $1,000 through a personal exemption within the framework of the New Jersey Gross Income Tax Act. Veteran taxpayers are eligible to take a supplementary exemption of $6,000 in addition to the $1,000 personal exemption.
Senator Bucco’s bill, S-3465, would index the Veterans gross income tax exemption to account for inflation. The bill requires that the exemption be adjusted annually using the percentage change of inflation during the 12-month period ending August 31 as determined by the Chained Consumer Price Index for all Urban Consumers (C-CPI-U).
As opposed to the traditional Consumer Price Index, which measures the change in prices for goods and services, the C-CPI-U accounts for consumers’ spending habits. This metric provides a more accurate view of the cost of living for consumers.
“Indexing certain tax exemptions to reflect the yearly increases in the cost of living is one way that we can show our unwavering support for Veterans in New Jersey,” Bucco said. “This bill would alleviate some of the financial strain felt by Veterans and is a meaningful step towards mitigating the burden of tax bracket creep.”
