State legislators and Governor Murphy finally came to a budget agreement last week to avert a government shutdown. While most of the discussion centered around closed beaches, NJ business leaders likely had more on their minds.
With the 2019 budget including more than $1.5 billion in new tax revenue for education, the state’s transit system, fulfilling pension obligations and moving toward free community college tuition, plus increases in the Earned Income Tax Credit and Child Care Credit, we’re all asking: What’s changing, and who’ll be expected to pay up?
Here’s a snapshot at some of the major changes expected to fill the revenue gap:
Though the tax itself will kick in at $5 million rather than $1 million, the rate has increased from 8.97% to 10.75%.
Corporations in the Garden State will take a hit with a 2.5% corporate tax surcharge. The tax will decrease to 1.5% after two years, eventually phasing out. By making it a temporary tax, lawmakers hope to insulate companies from having to downgrade their long-term forecasts to shareholders, who might press for cost reductions to compensate, according to NorthJersey.com.
These rides sharing services will include a new surcharge, charging 50 cents for solo trips and 25 cents for shared rides.
Currently, homeowners can only deduct the first $10,000 for local property taxes. But under the new budget, that increases to $15,000.
Going forward, the state will apply a higher tax rate — including existing sales tax and local hotel surcharges — to Airbnb and other short-term stay facilities. However, no sales tax will be imposed for short-term shore house rentals.
Shopping Bag Tax
New Jerseyans without reusable shopping bags will have to pay five cents for every paper and plastic shopping bag handed out at a retailer.
This new $37.4 billion budget brings tax increases and some tax breaks that will be felt around the state, making proactive corporate tax planning more imperative than ever.
Unsure how the new NJ financial landscape may affect your business? Call Magone & Company at (973) 301-2300 — we’re here to help.