New Jersey Budget

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CPAs Take Dim View of Governor Murphy's Proposed Budget

 – May 29, 2018
CPAs Take Dim View of Governor Murphy

ROSELAND, N.J. — Nearly 75 percent of the 786 CPAs who responded to a New Jersey Society of CPAs’ (NJCPA) survey this month said New Jersey’s economy would either get “significantly worse” (44 percent) or “marginally worse” (31 percent) over the long term under Governor Murphy’s proposed budget plan. Only 14 percent said it would end up better.

Respondents mostly blamed high taxes on corporations and individuals as a reason for the negative sentiment, which they said could eventually lead to more unemployment and an exodus of businesses and individuals from the state.

Overall almost 55 percent of the respondents rated the state’s current economy at “fair,” compared to 28 percent who said it is “good,” and 17 percent who said it’s “poor.” Only 1 percent rated the current economy as “excellent.”

Actions that were cited by respondents to improve the state’s economy included less regulation, lower marginal tax rates, repealing mandatory sick leave legislation, decoupling the school funding formula from property taxes, streamlining the police forces in the state and converting pension plans to 401(k) retirement accounts. Respondents backed a concerted effort to make the state more attractive to businesses and an overall desire to reduce borrowings.

Those who believed a positive outcome could come from the proposed budget cited Governor Murphy’s plans to tax millionaires, increase the real estate tax deduction, improve infrastructure, legalize recreational marijuana and allow New Jersey students to attend community colleges for free.

“The survey is a telling sign of what is keeping accountants up at night. They are deeply concerned about the economy and getting New Jersey back on track for both individuals and businesses,” said Ralph Albert Thomas, CEO and executive director at the NJCPA.

In a breakdown by region, 45 percent of respondents live in Northern New Jersey (Bergen, Essex, Hudson, Morris, Passaic, Sussex, Union or Warren county), 38 percent reside in Central New Jersey (Hunterdon, Mercer, Middlesex, Monmouth, Ocean or Somerset county), while 14 percent live in Southern New Jersey (Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester or Salem county).

 
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The New Jersey Society of Certified Public Accountants, with more than 15,000 members, represents the interests of the accounting profession and advances the financial well-being of the people of New Jersey. The NJCPA plays a leadership role in supporting the profession by providing members with educational resources, access to shared knowledge and a continuing effort to create and expand professional opportunities.Visit njcpa.org.


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:

 

Governor Murphy Signs New Jersey Budget

 – July 2, 2018
Governor Murphy Signs New Jersey Budget

Late in the evening of July 1, Governor Murphy signed the fiscal year 2019 budget after long negotiations with state legislators.

Because the budget was passed at the eleventh hour, much of it has not been assembled into readable form and experts are still deciphering some of the details, many of them important. Nonetheless, many of the main points are clear in outline form, which are listed below. The NJCPA will report more on the budget’s details, particularly the changes in tax law, as they become available.

Highlights of the budget:

  • An increase in the income tax rate to 10.75 percent for taxpayers with income of $5 million and above
  • Significant corporate business tax changes, including:
    • A surcharge of 2.5 percent for the next two years (tax years beginning on or after Jan. 1, 2018, through Dec. 21, 2019) and 1.5 percent for the subsequent two years (tax years beginning on or after Jan.1, 2020, through Dec. 31, 2021) for corporations with income of $1 million or more
    • A new combined reporting system
    • A change in the dividends-received deduction for tax years beginning after Dec. 31, 2016. There’s a reduction in the amount of the exclusion from 100 percent to 95 percent for 80-percent-owned subsidiaries.
  • 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. 
  • An increase in the state property tax deduction cap from $10,000 to $15,000
  • More funding for the Homestead property tax relief program
  • An increase in the Earned Income Tax Credit (EITC)
  • A new Child and Dependent Care Tax Credit
  • No increase in the sales tax rate, however short-term housing rentals (e.g. Airbnb) will now be subject to sales tax. Plus the state will see more sales-tax revenue thanks to a recent U.S. Supreme Court decision that will allow New Jersey and other states to more aggressively tax online sales.
  • A new surcharge on Uber and Lyft rides
  • A new tax on e-cigarettes and tobacco
  • More funding for NJ Transit
  • Modifications to the school funding formula
  • Funding for free community college for lower-income residents

As more information becomes available, we will provide updates at njcpa.org/njbudget.