54:8A-6.4. Maximum tax rate on personal service income

(a) If for any taxable year beginning in 1978 and thereafter an individual has personal service entire net income which exceeds the amount of entire net income specified in paragraph (1) of this subsection, the tax determined pursuant to subsection 6(c) of P.L.1961, c. 32 (C. 54:8A-6(c)) for such year shall be the sum of:

(1) The tax determined by subsection 6(c) of P.L.1961, c. 32 (C. 54:8A-6(c)) on the highest amount of entire net income on which the rate of tax does not exceed 10%, provided, however, that for taxable years beginning on or after January 1, 1978 and before January 1, 1980, it shall be the tax determined by subsection 6(c) of P.L.1961, c. 32 (C. 54:8A-6(c)) on the highest amount of entire net income on which the rate of tax does not exceed 12%, and provided further that for taxable years beginning on or after January 1, 1980 and on or before January 1, 1981, it shall be the tax determined on the highest amount of entire net income on which the rate of tax does not exceed 11%,

(2) 10% of the amount by which his personal service entire net income exceeds the amount of entire net income specified in paragraph (1) of this subsection, provided, however, that for taxable years beginning on or after January 1, 1978 and before January 1, 1980, the rate in this paragraph shall be 12% and that for taxable years beginning on or after January 1, 1980 and before January 1, 1981, the rate in this paragraph shall be 11%, and

(3) The excess of the tax determined under section 6(c) of P.L.1961, c. 32 (C. 54:8A-6(c)), without regard to this section, over the tax so determined with reference solely to his personal service entire net income.

(b) For purposes of this section the term "personal service income" means items of income includible as personal service income for purposes of section 1348 of the Internal Revenue Code; provided, however, that notwithstanding the provisions of such section of the Internal Revenue Code to the contrary with respect to the filing of returns by married individuals, the provisions of this section of this act shall be applicable in the case of a husband and wife who file separate New Jersey tax returns (whether or not on a single form).

(c) The personal service entire net income of an individual is the excess of:

(1) The amount which bears the same ratio (but not in excess of 100%) to his entire net income as his personal service gross income bears to his entire gross income, over

(2) The sum of his items of tax preference, as defined in this act, other than the item of tax preference for capital gains, for the taxable year.

For purposes of paragraph (1) of this subsection, the term "personal service gross income" means personal service income reduced by any deductions allowable under section 62 of the Internal Revenue Code which are properly allocable to or chargeable against such personal service income.

L.1978, c. 131, s. 6, eff. Oct. 18, 1978. Amended by L.1979, c. 437, s. 1, eff. Feb. 14, 1980; L.1981, c. 374, s. 6, eff. Dec. 30, 1981.