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Cynthia

Gross Income Tax Deductions

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As a resident of New Jersey, I recently learned that my 403 (b) contributions are NOT deductible for New Jersey gross income tax purposes (but employee contributions to 401 (k) plans are). This means that I pay New Jersey personal income taxes on wages INCLUDING my 403 (b) contributions despite the fact that they are federally tax deductible. I would like to know how many other states exclude 403 (b) contributions from income tax deductions. Is New Jersey unique? If not, why aren't more people complaining about this?

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There are some other states that like NJ subject 403(b) contributions to current taxation.

 

If I were you I would contact the teachers' union----the New Jersey Education Association----ask them why they have been sound asleep all these many years.

 

Peace,

Joel

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Guest Guest_Cynthia

Thanks for the info. about other states. I thought about contacting them, but I want to find out how many other states (and which ones) have this poor practice. Does anyone know of a national association that tracks this kind of information?

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Guest David Powell

New Jersey and Pennsylvania have been the states that tax 403(b) contributions as they go in, though I have not looked at that in a couple of years, so it is probably worth confirming that that remains the case in Pennsylvania (I understand there had been some attempts to change the law there). Interestingly, some city income tax statutes around the country would appear to tax 403(b) contributions on the front end as well, but nobody seems to pay any attention to them.

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