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NJ lottery winners dodge a tax bullet

Oct 28, 2014, 10:39 am

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New Jersey Lottery

A proposed extra tax on New Jerseyans' lottery winnings stalled today after it became clear it was unlikely to be approved by a key state Senate panel.

"It didn't have the votes," said Senate Budget Committee Chairman Paul Sarlo (D-Bergen).

The bill (S1767) would impose an additional 0.5 percent tax on lottery winnings of more than $600.

The money would be used to fund after school programs run by non-profit groups in municipalities where at least 40 percent of the school district's students are "at risk."

New Jersey currently taxes lottery winnings on a sliding scale that peaks at 10.8 percent. On the federal level, the winnings are taxed as ordinary income. The federal rate for income of more than $406,750 for a single person is 39.6 percent.

According to 2012 data from the Tax Foundation, New Jersey's top rate for lotto winners is the highest of any state in the nation.

The budget committee's endorsement was the next step before the bill was to get a vote in the full state Senate. It was already approved by the Senate's state government committee in May.

Sarlo declined to say which committee members opposed the bill, or whether he supported it.

"When the bill comes up for a vote, you'll see my vote," he said.

The bill's sponsor, state Sen. Ronald Rice (D-Essex), said he believes it will be approved by the committee when he has a chance to talk to members about it.

"I'm confident it will pass. With this bill, it makes good sense," he said.

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