Sponsored by:
Assemblywoman VERLINA REYNOLDS-JACKSON
District 15 (Hunterdon and Mercer)
Assemblyman RAVI S. BHALLA
District 32 (Hudson)
Assemblywoman KATIE BRENNAN
District 32 (Hudson)
SYNOPSIS
Imposes gross income tax at rate of 100 percent on amounts received by resident taxpayers from Anti-Weaponization Fund.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning the taxation of monies received from the Anti-Weaponization Fund, and supplementing Title 54A of the New Jersey Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. As used in this section, “Anti-Weaponization Fund” means the fund established by the Attorney General of the United States pursuant to the settlement agreement in the federal civil case Donald J. Trump v. Internal Revenue Service, No. 1:26-cv-20609-KMW (S.D. Fla.).
b. Notwithstanding any provision of the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq., to the contrary, including, but not limited to, the rates of tax set forth in N.J.S.54A:2-1, all monies received by a resident taxpayer during a taxable year from the Anti-Weaponization Fund shall be considered taxable income and shall be subject to tax at the rate of 100 percent.
c. Notwithstanding any provision of law to the contrary, no deductions, exemptions, or exclusions shall be allowed against the income taxable pursuant to this section, and no credits shall be allowed against the tax liability computed pursuant to this section.
d. The filing, payment, collection, and enforcement of the tax shall be administered pursuant to the provisions of the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq., and all powers and authority of the Director of the Division of Taxation in the Department of the Treasury established thereunder shall apply to the tax imposed pursuant to this section.
2. This act shall take effect immediately and apply to taxable years beginning on or after January 1, 2026.
STATEMENT
This bill provides that all monies received by a State resident from the Anti-Weaponization Fund would be subject to gross income tax at the rate of 100 percent. The bill also provides that no deductions, exemptions, exclusions, or tax credits may be claimed against the tax imposed on these monies.
The Anti-Weaponization Fund was established by the Attorney General of the United States pursuant to a May 2026 settlement agreement in the federal civil case Donald J. Trump v. Internal Revenue Service, No. 1:26-cv-20609-KMW (S.D. Fla.). The Anti-Weaponization Fund is set to receive $1.776 billion from the federal Judgment Fund. Under the settlement agreement, the monies in the Anti-Weaponization Fund will be awarded by the federal Department of Justice to approved claimants who are alleged to have been victims of “lawfare and weaponization” by the federal government. According to the settlement agreement, well-known examples of “lawfare and weaponization” are alleged to include the Biden Administration's “abuse” of the Freedom of Access to Clinic Entrances Act, the Biden Administration's “wrongful labeling” of certain persons as domestic terrorists, and the Internal Revenue Service’s “targeting” of groups based on ideological criteria. Given the subjective nature of these determinations, the fund has been widely described as a “slush fund” for the Trump Administration’s political allies, including those who were indicted or convicted for offenses related to the January 6, 2021 attack on the United States Capitol.
The settlement agreement makes clear that “[t]he recipient of any relief from The Anti-Weaponization Fund will have sole responsibility to comply with their own applicable federal, state, and local tax requirements that arise as a result of this Settlement Agreement and any relief from The Anti-Weaponization Fund.” The federal government therefore acknowledges that the State of New Jersey is fully within its sovereign taxing power to impose the tax proposed under this bill, and the recipients of claims from the fund will be fully responsible for the State tax imposed on these monies.