Do you remember the New Jersey tourism slogan from the early eighties: “New Jersey and You, Perfect Together”? The message for vacationing in New Jersey meant: long white beaches, surf fishing, entertainment and amusements, and camping in the mountains. As New Jersey’s governor at the time said, “It’s a vacation in America the Beautiful….only smaller.” New tax law changes are taking affect making NJ and you even more Perfect Together.
On October 14th, a new law was established removing New Jersey from the top of the list as one of the worst states in which to die, which may give pause to many residents seeking to establish their domicile elsewhere. Those who die a New Jersey resident in 2017 will not be subject to the NJ estate tax unless their taxable estate is greater than $2,000,000. Beginning with deaths occurring on January 1, 2018, the NJ estate tax is repealed. Unfortunately, those who die in 2016 with estates exceeding $675,000 will remain subject to NJ estate tax.
At the foundation of the new law is the need to replenish New Jersey’s Transportation Trust Fund, which includes an increase of the gas tax by $.23 per gallon. This increase goes into effect next Tuesday, November 1st. The changes to New Jersey’s estate tax law are part of the compromise being made in exchange for the increased gas tax.
In addition to those important changes above, here is a summary of other aspects of the bill.
- NJ Inheritance Transfer Tax is not affected
- Sales tax cut from 7% to 6.625% starting 1/1/18
- Additional personal exemption of $3,000 for NJ veterans, if honorably discharged or released under honorable circumstances from active duty in the armed forces, a reserve, or the National Guard in a federal active duty status.
- Increase to the NJ EITC benefit – total benefit equal to 35% of the federal EITC for tax years beginning with 2016. (EITC = Earned Income Tax Credit)
- Increased NJ retirement income exclusion phased in over the next 4 years for NJ taxpayers aged 62 and over, with incomes of $100,000 or less:
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