New Jersey residents in the military will no longer have to pay state income taxes on combat pay under a new measure Gov. Phil Murphy signed into law Monday.
The law also exempts servicemen or women from paying state income taxes on their wages if they’re being hospitalized for an injury from a combat zone.
The governor signed the bipartisan legislation into law during a virtual event.
“I’m thrilled at long last that we’re going to correct this forever and always,” Murphy said from his Trenton office prior to signing the bill into law.
State officials couldn’t say how much the measure would cost New Jersey in annual incoming. The impact on revenues “would vary annually and fluctuate according to future U.S. military deployments,” according to the measure’s fiscal statement.
Murphy, meanwhile, said he wasn’t concerned about the state losing revenue given the cause.
“I don’t care how much money this costs us,” he said. “This is not right.”
Combat zone pay is an additional payment beyond a military member’s regular salary. Soldiers are already allowed to exclude it from federal income taxes.
According to the legislation, a combat zone is defined as any area the president designates as such in an executive order.
The bill passed both chambers of the state Legislature last week with overwhelming support from lawmakers. The state Senate approved it by a 39-0 vote and the Assembly did so by a 78-0 vote.
The new law takes effect immediately and can be applied to taxable years beginning in January.
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