Governor Murphy Signs State Budget

On July 1, 2018, Governor Murphy signed New Jersey’s 2019 budget. Here are a few highlights of which you should be aware.

Main highlights:

• Increased income tax rate, effective for the 2018 tax year, to 10.75% for individual taxpayers whose incomes are at or above $5M
• A temporary corporate business tax surcharge of 2.5% for 2018 & 2019 and 1.5% for 2020 & 2021
• Effective for the 2018 tax year, an increase in the state property tax deduction cap from $10,000 to $15,000
• There will be no increase in sales tax, the rate stays at 6.625%.
• NJ Division of Taxation to hold a 90-day tax amnesty program this year
• New tax on e-cigarettes and tobacco
• New Child and Dependent Care Tax Credit
• Increased Earned Income Tax Credit
• Mandatory combined corporate reporting effective for tax years beginning after 2018
• Modification of sourcing rules for services effective for tax years beginning after 2018
• Research and development credit is nonrefundable for tax years beginning after 2017