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NJCPA Responds to Governor Murphy’s Proposed FY 2019 Budget

 – March 14, 2018
NJCPA Responds to Governor Murphy’s Proposed FY 2019 Budget

Statement by Ralph Albert Thomas, CEO and Executive Director

The New Jersey Society of Certified Public Accountants (NJCPA) applauds Governor Phil Murphy for developing a comprehensive budget plan that promotes critical priorities including education, mass transit, workforce development, and public health and safety. The NJCPA also commends the administration’s efforts to alleviate the tax burden on our citizens by increasing the property tax deduction to $15,000.

The NJCPA has long advocated for policies that will generate economic growth and supported a fair tax system that enables companies and individuals to thrive. We are concerned that the increased spending and revenue raisers in the Governor’s budget will have far-reaching consequences, affecting New Jersey’s ability to grow and attract business.

Our members serve tens of thousands of businesses and individuals. They are on the front lines of the state’s economy, in the trenches with the people who make the thousands of decisions every day, big and small, that shape New Jersey’s economic climate. Our members are, by and large, practical and realistic. They know that the state can’t tax its way to prosperity.

A millionaires’ tax directly impacts small businesses that flow their income taxes through personal returns. We already have some of the highest personal income and business taxes in the nation, and our rates compare unfavorably with neighboring states. The proposed marginal tax rate of 10.75 percent on income above $1 million would put New Jersey well above New York State’s rate (8.82 percent) and be more than three times Pennsylvania’s flat rate (3.07 percent).

NJCPA members already hear objections about New Jersey’s high taxes from clients who are looking to leave New Jersey. In a member survey, 75 percent said they have recommended to some clients that they move out of state. In short, the proposed budget plan will be counterproductive.

Additionally, while we appreciate the Governor’s efforts to help working families, we believe increasing the minimum wage to $15 and imposing another mandate on businesses will have a particularly negative impact on small businesses throughout the state.

We need to work together to provide an environment that not only fosters growth but adapts quickly to changing business needs.

We commend the Governor’s efforts to grow the state’s economy and stand ready to be a resource to his administration.


Watch as NJCPA's Jeff Kaszerman and Ralph Albert Thomas discuss New Jersey's fiscal year 2019 budget — tax increases, how we got here and what happens now:

 

Recent New Jersey Income Tax Changes

 – August 13, 2018
Recent New Jersey Income Tax Changes

New legislation signed into law on July 1, 2018, made several changes to the New Jersey Gross Income Tax Act at N.J.S.A. 54A:1-1 et seq. as part of New Jersey’s fiscal year 2019 budget. The changes include increases in the New Jersey Earned Income Tax Credit and the property tax deduction, and the addition of a new Child and Dependent Care Credit for resident taxpayers.

The law also increased the income tax rate for income over $5,000,000. More information about the tax rate increase is available in this notice.

These changes affect the returns that taxpayers will file beginning in tax year 2018.

Earned Income Tax Credit (EITC)

Currently, qualified taxpayers are eligible for a New Jersey EITC equal to 35 percent of their federal earned income credit. The new law increases the percentage as follows:

  • 37 percent in tax year 2018
  • 39 percent in tax year 2019
  • 40 percent in tax year 2020 and thereafter

Read more

Property Tax Deduction

Qualified homeowners and tenants are eligible for a deduction for property taxes they paid for the calendar year on their New Jersey principal residence. The new law increases the maximum Property Tax deduction from $10,000 to $15,000. 

Read more

Child and Dependent Care Credit

The law creates a new gross income tax credit for eligible resident taxpayers who are allowed a federal credit for expenses they incur for the care of one or more qualifying individuals. A qualifying individual can be a child under age 13 or a spouse or dependent who lived with the taxpayer for more than half the year and is physically or mentally incapable of self-care.

The credit will reduce the amount of New Jersey Gross Income Tax a taxpayer owes, but won’t result in a refund if no taxes are owed. Taxpayers may be able to claim the New Jersey Child and Dependent Care Credit if they:

  • Paid expenses for the care of one or more qualifying individuals so that they are able to work or actively look for work;
  • Are allowed the federal child and dependent care credit; and
  • Have New Jersey taxable income of $60,000 or less.

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.

If NJ taxable income is: Amount of the NJ credit is:
Not over $20,000    50% of federal credit
over $20,000 but not over $30,000    40% of federal credit
over $30,000 but not over $40,000    30% of federal credit
over $40,000 but not over $50,000   20% of federal credit
over $50,000 but not over $60,000    10% of federal credit

The maximum New Jersey credit cannot exceed $500 for one qualifying individual or $1,000 for two or more qualifying individuals.

Carried Interest

In addition to the above, the new law also provides for the taxation of certain investment management services, also known as “carried interest.” However, those provisions do not take effect unless and until Connecticut, New York and Massachusetts enact laws which do the same thing. Because those states have not enacted similar laws, and they are not expected to do so in the near future, those provisions remain inactive.