By Larry Higgs
www.nj.com
(TNS)
A number of lawmakers want to provide tax relief to motorists who have been hit by four consecutive fare increases on New Jersey’s toll roads.
Specifically, they want to allow drivers who pay their tolls with E-ZPass to deduct the toll from their state income taxes. The deductible amounts vary depending on the drafts of the various bills. But the idea of allowing drivers to deduct the toll from their state income taxes has proven difficult to pass in the legislature and has failed to gain passage in New Jersey and other states in recent years.
One of only two states in the country that allowed state tax deductions for drivers who paid their tolls using E-ZPass eliminated that option in 2021.
The proposals come in five different versions, but all state that E-ZPass fees, fines or tolls that are considered business expenses and are reimbursed by the employer or deducted from federal taxes cannot be deducted under the bill.
If the bill is approved by both houses of the Legislature and signed by Governor Phil Murphy, New Jersey would give taxpayers a benefit that few states have and that the IRS does not allow: the deduction of commuting expenses, at least as far as tolls paid are concerned.
A bipartisan bill offers motorists the best value for their tolls. A bill introduced by Senators Patrick Diegnan (D-Middlesex) and James Holzapfel (R-Ocean) would allow motorists to deduct $1,000 from their income taxes when they travel on toll roads within the state or interstate bridges and tunnels that connect to New Jersey.
This bill was introduced in January and is still awaiting a hearing by the Senate Budget and Appropriations Committee.
Diegnan credited Holzapfel with the idea that led to the bill.
“Basically, it’s about providing tax relief to people who have to commute to earn a living,” Diegnan said in an interview. “The idea was (due to) the increase in gasoline taxes at the time, but it’s even more relevant given the increased tolls.”
On March 26, Murphy signed legislation (A4011) that renews the state’s Transportation Trust Fund, which funds major state and interstate highway, bridge and transit construction projects in the state.
The renewal will provide a total of $15.6 billion over five years to support Department of Transportation and NJ Transit capital projects. The money will be raised by increasing the current gasoline tax of 42.3 cents per gallon by 1.9 cents per year for five years.
Diegnan also cited the high cost of daily commuting to New York City, where drivers pay a $17 cash toll, among other expenses, as another reason for the law change.
Holzapfel could not be reached for comment.
A version of this bill would limit users of the New Jersey Turnpike, Garden State Parkway and Atlantic City Expressway to a $1,000 annual tax deduction if they spend more than $1,000 on tolls paid with E-ZPass. This proposal was proposed by state Rep. Gregory McGluckin (R-Ocean).
In the bill, McGluckin mentioned the Turnpike Authority’s annual funding of NJ Transit’s operating budget of $455 million and said toll payers “pay more than their fair share for transportation and economic development projects.”
Another bill would allow motorists to write off 50% of their E-ZPass Turnpike and Parkway toll fees, excluding fines, fees and tolls reimbursed by an employer or deducted from federal taxes as a business expense.
This bill was introduced by Representative Robert J. Karabinchak (D-Middlesex) and co-sponsored by Representatives Shama Haider and Ellen Park and Representative Clinton Calabrese (all D-Bergen).
One version of this bill would require the state to create and fund a $250 million toll relief program that would credit 50% of tolls paid on the Turnpike, Parkway and AC Expressway to the driver’s personal E-ZPass account. This credit would be valid for only one year.
Holzapfel supported the Senate version and Reps. Paul Kanitra (R-Ocean) and McGluckin supported the House version.
“We wish tolls were fair and there were no toll diversions, but since that is not the case, we welcome attempts to balance the inequality through compensation,” said Steve Carrellas, state policy director for the National Motorists Association.
The association would favor “stronger legal restrictions on New Jersey’s two toll road authorities in setting toll rates,” he said.
This refers to the 2020 policy change that implemented a 3% annual toll increase on the Parkway and Turnpike through a process called indexing, which has no end date.
“This is the most direct and efficient solution and would lead to much more transparency than exists today,” said Carrellas.
The IRS allows toll deductions only for business trips, meaning commuting and other travel expenses cannot be deducted.
But the bills face a rocky road ahead. They were all proposed in previous years and never made it past the legislative committees to which they were submitted.
“We’re not talking about a huge amount here,” Diegnan said. “I think the governor and the Senate president and speaker are interested in giving people tax relief. I think there’s a good chance the bill will pass.”
Lawmakers in other states, including Maine, New York and Indiana, also tried unsuccessfully to pass their own version of New Jersey’s toll-deduction legislation.
Only two states in the country allowed drivers to write off E-ZPass toll fees.
West Virginia used to offer a deduction of up to $1,200 for tolls paid in that state with E-ZPass or two state-issued cards for non-commercial travel, but that law was repealed in 2021.
Massachusetts remains the only state that allows tolls and transit fees to be deducted from income taxes if they exceed $150 per person, with a maximum deduction of $750 in effect since 2006.
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