SENATE BUDGET AND APPROPRIATIONS COMMITTEE

STATEMENT TO

SENATE, No. 2386

STATE OF NEW JERSEY

DATED:  FEBRUARY 3, 2025

      The Senate Budget and Appropriations Committee reports favorably Senate Bill No. 2386.

      This bill establishes a refundable gross income tax credit to provide reimbursement to active members of volunteer fire departments and first aid squads for the use of their personal vehicle in the performance of active duty.

     The amount of the credit is determined by multiplying the business standard mileage rate set by the Internal Revenue Service for transportation or travel expenses by the number of miles the taxpayer actually and necessarily traveled by the taxpayer in the tax year using their personal vehicle in the performance of active duty.  The maximum amount of the credit would be $500.  If married individuals filing a joint return both qualify, they would be allowed a joint credit of up to $1,000.

     To be eligible for the credit, a taxpayer would, in the taxable year for which the credit was claimed, be required to:  (1) have been an unpaid member in good standing of the organization; and (2) have completed “qualifying service” with the organization.

     The bill defines “qualifying service” as:

     (a)   for a volunteer who does not have duty hours, (i) active participation in at least 60 percent of the regular alarms or other calls to active duty to which the organization responds during the taxable year, (ii) recorded attendance at not less than 60 percent of the organization’s mandatory meetings during the year, (iii) participation in all of the organization’s mandatory meetings during the year, and (iv) performance during the year of not less than 60 percent of any other miscellaneous duty required by the organization; or

     (b)   for a volunteer who does have duty hours, performance of at least 400 duty hours during the year, of which no more than 50 percent could be for drills or other training classes or exercises.

     The bill requires each volunteer emergency services organization to certify to the Director of the Division of Taxation in the Department of the Treasury, on or before January 15 of each year, a list of the active members of the organization during the prior tax year.  The certification will assist the Division of Taxation in verifying a taxpayer’s eligibility for a gross income tax credit under the bill.

FISCAL IMPACT:

      The Office of Legislative Services (OLS) estimates that this bill will reduce revenues dedicated to the Property Tax Relief Fund by approximately $11 million annually beginning in FY 2026.

      For the purposes of this analysis, the OLS assumes that approximately 66 percent of active volunteers will claim the tax credit and that these persons will drive an average of 10 miles per week in the performance of their duties.  Based on these assumptions, the OLS estimates that approximately 47,000 active volunteers would receive an average tax credit of $350 per year.