Allows gross income tax deduction for certain student loan interest.
What changed between versions
The state deduction is no longer automatically linked to the federal IRC Section 221 provision. Instead, it operates as an independent state deduction with its own income threshold and cap, meaning future changes to the federal student loan interest deduction will no longer automatically affect the New Jersey deduction.
The act title is narrowed from 'supplementing Title 54A of the New Jersey Statutes' to 'supplementing chapter 3 of Title 54A of the New Jersey Statutes,' making the statutory placement more precise.
A flat gross income cap of $85,000 is established. Taxpayers with gross income above $85,000 are not eligible for the deduction. The introduced version had no explicit state-level income cap because it simply mirrored the federal phase-out rules.
Interest paid on student loans under the New Jersey College Loans to Assist State Students Program (P.L.2021, c.128) is explicitly excluded from this deduction, preventing taxpayers from claiming both this new deduction and the existing program-specific deduction for the same interest.
The bill now includes its own definition of 'qualified education loan' as indebtedness incurred solely to pay higher education expenses for the taxpayer, spouse, or dependent, rather than relying on the federal definition in IRC Section 221.
