Imposes gross income tax at rate of 100 percent on amounts received by resident taxpayers from Anti-Weaponization Fund.
S4405 would amend New Jersey’s Gross Income Tax Act to impose a 100 percent gross income tax on any amounts received by a New Jersey resident from the federal “Anti-Weaponization Fund.” The bill defines that fund by reference to a federal settlement agreement in Donald J. Trump v. Internal Revenue Service and makes clear that all such receipts would be treated as taxable income for New Jersey purposes.
The bill also bars any deductions, exemptions, exclusions, or credits from offsetting the tax, and it directs that the tax be administered under the existing procedures and enforcement powers of the Division of Taxation. The measure would take effect immediately and apply to taxable years beginning on or after January 1, 2026, meaning it is designed to capture payments received from the fund as soon as they are taxable under state law.
If enacted, the bill would create a new, targeted provision in Title 54A of the New Jersey Statutes taxing one specific category of federal settlement proceeds at a 100 percent rate, effectively recapturing the full amount for the State through income tax liability. It would not change the general gross income tax structure, but it would add a special rule for resident taxpayers who receive money from the Anti-Weaponization Fund and would authorize the Division of Taxation to collect and enforce that tax under existing procedures.
The bill text and statement are strongly critical of the Anti-Weaponization Fund and the federal settlement behind it, describing the fund as a vehicle for politically favored claimants and framing the measure as a response to that arrangement. No committee transcripts or votes are available, so there is no recorded legislative debate or formal vote history to indicate broader support or opposition within the Legislature. Based on the introduced text alone, the bill appears to be drafted in a highly partisan and adversarial tone.
The main point of contention is the bill’s targeted treatment of payments from the Anti-Weaponization Fund, which raises questions about whether the State should single out a federal settlement program for a 100 percent tax rate. Supporters would likely view the measure as a way to prevent New Jersey residents from benefiting from what the statement characterizes as politically motivated federal payouts, while opponents could argue that it is punitive, politically driven, and potentially unusual as a tax policy tool. The bill also relies on a federal settlement tied to highly controversial allegations about “lawfare,” January 6-related prosecutions, and IRS targeting, which makes the underlying subject matter itself a source of dispute.