New Jersey Tax Changes
July 2, 2018 – NJCPA
New Jersey – On July 1, 2018, Governor Phil Murphy signed the state budget for fiscal year 2019. The new budget made some changes in New Jersey’s tax laws, some of which are highlighted below:
1. There will be an increase in the income tax rate to 10.75 percent for taxpayers with income of $5 million and above. New Jersey’s current maximum personal income tax rate is 8.97% for income over $500,000. This change is effective beginning calendar year 2018.
2. An increase in the state property tax deduction cap from $10,000 to $15,000.
3. An increase in the Earned Income Tax Credit (EITC) from 35% to 40% of the Federal earned income tax credit, phased in over 3 years (37% in 2018, 39% in 2019 and 40% in 2020 and thereafter).
4. A new Child and Dependent Care Tax Credit. The amount of the New Jersey credit is a percentage of the taxpayer’s federal child and dependent care credit and varies according to the amount of the taxpayer’s New Jersey taxable income. This credit is not available for taxpayers with New Jersey taxable income higher than $60,000. The maximum New Jersey credit cannot exceed $500 for one qualifying individual or $1,000 for two or more qualifying individuals.
5. Surcharge on corporations:
Surcharge Rate Period Covered Covered Entities
The surcharge is in addition to the top marginal tax rate for covered entities.
6. Authorization for the New Jersey Division of Taxation to hold a 90-day tax amnesty program that begins this year and ends by Jan. 15, 2019. Eligible returns include those that were due on or after Feb. 1, 2009, and prior to Sept. 1, 2017.
We expect that further guidance and clarifications will be issued in the weeks and months ahead. You may call us if you have any questions or you may go to the link below if you want to send us your questions.
You may also visit NJCPA website for additional information at https://njcpa.org.