Bill review: Marriage Penalty Elimination Act (NJ)

[daphnehanse11]

Bill review: NJ A1185/S2401 Marriage Penalty Elimination Act

Reform ID: nj-a1185-marriage-penalty-elimination | State: NJ
Bill text: https://pub.njleg.state.nj.us/Bills/2026/A1500/1185_I1.HTM
Description: Revises joint filer rate brackets to eliminate the marriage penalty by widening the 1.4% and 1.75% brackets and removing the 2.45% bracket for joint, head of household, and surviving spouse filers.

Merging this PR will publish the bill to the dashboard.

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What we model

Provision	Parameter	Current	Proposed
Joint filer 1.4% bracket	...joint.brackets[1].threshold	$0–$20,000 at 1.4%	$0–$40,000 at 1.4%
Joint filer 1.75% bracket	...joint.brackets[2].threshold	$20,000–$50,000 at 1.75%	$40,000–$70,000 at 1.75%
Head of household brackets	...head_of_household.brackets[1-2]	Same as joint	Same restructuring
Surviving spouse brackets	...surviving_spouse.brackets[1-2]	Same as joint	Same restructuring

The 2.45% bracket ($50K–$70K) is eliminated entirely for joint, HoH, and surviving spouse filers. Brackets above $70K are unchanged.

Validation

External estimates

Source	Estimate	Period	Link
NJ OLS (A1404, 2018 predecessor)	-$294.8M (TY2018), -$309.1M (TY2019), -$324.5M (TY2020)	Annual	Fiscal Estimate

The 2018 OLS fiscal estimate analyzed A1404, a substantively identical predecessor bill. OLS used TY2015 Statistics of Income data with 5% annual growth projections. The estimate found ~1.231 million married joint filers affected, with a base-year differential of $232.9M ($1.483B baseline vs $1.251B proposed), adjusted upward 10% for HoH/surviving spouse returns.

No fiscal estimate has been published for the current session versions (A1185/S2401).

Back-of-envelope check

Max per-filer savings: $210/year (for taxable income >= $70K)
~2.3M affected joint/HoH/surviving spouse returns × $130 avg savings = **$300M**

PE vs external comparison

Source	Estimate	vs PE	Difference
PE (PolicyEngine)	-$297M	—	—
OLS (A1404 TY2018)	-$294.8M	-0.7%	Excellent
OLS (A1404 TY2020 projected)	-$324.5M	+9.2%	Excellent
Back-of-envelope	~$300M	+1.0%	Excellent

Verdict: PE estimate closely matches the 2018 OLS fiscal estimate for the identical predecessor bill. The OLS TY2020 projection ($324.5M) is ~9% higher than PE's 2026 estimate ($297M), which is reasonable given methodological differences and that OLS applied 5% annual growth from a 2015 baseline. Confidence: High.

Parameter changes

Parameter	Period	Value	Bill Reference
gov.states.nj.tax.income.main.joint.brackets[1].threshold	2026-01-01.2100-12-31	40,000	Section 1
gov.states.nj.tax.income.main.joint.brackets[2].threshold	2026-01-01.2100-12-31	40,001	Section 1
gov.states.nj.tax.income.main.joint.brackets[2].rate	2026-01-01.2100-12-31	0.0175 (1.75%)	Section 1
...head_of_household.brackets[1].threshold	2026-01-01.2100-12-31	40,000	Section 1
...head_of_household.brackets[2].threshold	2026-01-01.2100-12-31	40,001	Section 1
...head_of_household.brackets[2].rate	2026-01-01.2100-12-31	0.0175 (1.75%)	Section 1
...surviving_spouse.brackets[1].threshold	2026-01-01.2100-12-31	40,000	Section 1
...surviving_spouse.brackets[2].threshold	2026-01-01.2100-12-31	40,001	Section 1
...surviving_spouse.brackets[2].rate	2026-01-01.2100-12-31	0.0175 (1.75%)	Section 1

Note: bracket[2] uses $40,001 threshold (not $40,000) to avoid duplicate-threshold issue in PolicyEngine's MarginalRateTaxScale.calc().

Key results

Metric	Value
Revenue impact	-$297M
Poverty rate	19.53% → 19.50% (-0.19%)
Child poverty rate	17.58% → 17.52% (-0.32%)
Winners	41.0%
Losers	0.1%

Decile impact

Decile	Relative Change	Avg Benefit
1	0.02%	$5
2	0.05%	$28
3	0.09%	$63
4	0.10%	$82
5	0.10%	$97
6	0.09%	$110
7	0.09%	$119
8	0.09%	$149
9	0.08%	$172
10	0.02%	$213

District impacts

District	Avg Benefit	Winners	Losers	Poverty Change	Child Poverty Change
NJ-1	$80	43%	0%	-0.01%	-0.02%
NJ-2	$72	40%	0%	-0.50%	-0.56%
NJ-3	$97	43%	0%	-0.15%	-0.09%
NJ-4	$96	42%	0%	-0.13%	-0.46%
NJ-5	$105	42%	0%	-0.22%	-0.40%
NJ-6	$92	42%	0%	-0.49%	-0.94%
NJ-7	$116	43%	0%	0.00%	0.00%
NJ-8	$68	37%	0%	0.00%	-0.01%
NJ-9	$79	39%	0%	-0.04%	0.00%
NJ-10	$74	38%	0%	-0.04%	0.00%
NJ-11	$111	43%	0%	0.00%	0.00%
NJ-12	$99	42%	0%	-0.69%	-1.39%

Reform parameters JSON

{
  "gov.states.nj.tax.income.main.joint.brackets[1].threshold": {"2026-01-01.2100-12-31": 40000},
  "gov.states.nj.tax.income.main.joint.brackets[2].threshold": {"2026-01-01.2100-12-31": 40001},
  "gov.states.nj.tax.income.main.joint.brackets[2].rate": {"2026-01-01.2100-12-31": 0.0175},
  "gov.states.nj.tax.income.main.head_of_household.brackets[1].threshold": {"2026-01-01.2100-12-31": 40000},
  "gov.states.nj.tax.income.main.head_of_household.brackets[2].threshold": {"2026-01-01.2100-12-31": 40001},
  "gov.states.nj.tax.income.main.head_of_household.brackets[2].rate": {"2026-01-01.2100-12-31": 0.0175},
  "gov.states.nj.tax.income.main.surviving_spouse.brackets[1].threshold": {"2026-01-01.2100-12-31": 40000},
  "gov.states.nj.tax.income.main.surviving_spouse.brackets[2].threshold": {"2026-01-01.2100-12-31": 40001},
  "gov.states.nj.tax.income.main.surviving_spouse.brackets[2].rate": {"2026-01-01.2100-12-31": 0.0175}
}

Versions

• PolicyEngine US: 1.201.1
• Analysis year: 2026

[DTrim99]

Is there a fiscal note or estimate of this bill?

[daphnehanse11]

Household Earnings Sweep: NJ nj-a1185-marriage-penalty-elimination

Household: Married couple, no children
Year: 2026

• Max benefit: $210 at $72,362 earnings
• Affected earnings range: $24,121 – $400,000

Drag and drop /Users/daphnehansell/Documents/GitHub/state-legislative-tracker/charts/nj-a1185-marriage-penalty-elimination.png below to embed the chart.

Generated by generate_household_chart.py