PNF CPA Highlights How the New NJ Budget Will Affect You

New Jersey Governor Phil Murphy signed off on the new state budget for 2019 in early July, which included some changes to the current tax laws. The $37.4 billion budget aims to redirect more cash into NJ Transit, public schools and some property tax relief to help benefit all New Jerseyans.

If you are a New Jersey resident, our talented CPAs here at PNF have broken down what you should know about the tax changes that will affect you in 2019:

Tax Increases

The budget for 2019 will increase the income tax rate for those with an income of $5 million and above. The new rate for 2019 will be 10.75 percent, which is almost two percent higher than New York and almost four percent higher than Connecticut. This change is bound to affect professional athletes, CEOs and others with high annual incomes.

In addition to the personal income tax hike, this new budget will also have an impact on large businesses and corporations that bring in over $1 million. For the next two years, a corporate business tax (CBT) surcharge of 2.5 percent will be enacted, and in years three and four it will fall to 1.5 percent. Corporations will also be subject to paying additional taxes if they move their profits out of state, park profits in offshore shelters, or are an out-of-state online retailer.

Tax Amnesty

Have you forgotten to pay your taxes? Then you’ll like the provision in this new budget that authorizes the New Jersey Division of Taxation to hold a 90-day tax amnesty program. The program is anticipated to go into effect later this year and will allow delinquent filers to pay taxes dating back to 2009 with a 50 percent reduction on the interest incurred over the past ten years.

Education & Financial Aid

The new budget for 2019 allocates funds to expand Pre-K programs across the state, support more school construction projects, and establish a grant program to help school districts offer college-level computer science courses and support professional development.

The Governor’s new budget also pumps more money into higher education, providing $2.4 billion for “direct support of higher education institutions and for programs that provide financial assistance to students.” An additional $50 million in funding through this budget will support community college financial assistance programs. This is expected to help roughly 15,000 students gain access to more affordable tuition for both two-year degrees from community colleges and four-year degrees from State Universities.

Property Taxes & Savings For Homeowners

In an effort to offset any fallout from the new federal tax plan, the 2019 New Jersey budget allows for an increase in state property tax deduction cap, from the current $10,000 up to $15,000. The new budget also restores $150 million that had been cut from the Homestead Benefit Program, which is a popular property tax relief program, and the Senior and Disabled Citizens’ Tax Freeze program, which reimburses those who are eligible for property tax increases.omHome

Benefits For Working Families

This new budget also aims to help working families by expanding the Earned Income Tax Credit (EITC) from the current rate of 35 percent, up to 40 percent of the federal benefit over three years. The budget allots an additional $27.2 million for the expansion, which “combined with the existing credit will provide 510,000 taxpayers with an estimated benefit of $986, an increase of $53. By fiscal 2021, the average estimated benefit will be over $1,160.” In order to qualify for the EITC, your total family household income cannot exceed $50,597.

Another benefit for working families within the framework of the new budget is the expansion of the Child and Dependent Care Tax Credit (CDCTC). In order to help alleviate the financial burden of child and dependent care, Governor Murphy’s budget introduced a new tax credit that will equal a percentage of the federal credit based on your income. The Governor’s administration estimates that this credit will help roughly 70,000 taxpayers with an income of $60,000 or less in the state of New Jersey.

Miscellaneous Tax Changes

In an effort to raise money for broader projects throughout the state, like improving NJ Transit and public schools, the 2019 budget will tax some miscellaneous items that could affect your daily life. For example, if you use Uber or Lyft services, this new budget will impose a 50-cent-per-ride surcharge. If you smoke e-cigarettes, you will see a tax on the liquid nicotine for e-cigarettes in 2019. And if you use AirBnB when you travel, you will surely notice a new sales tax being implemented on home sharing services.

Be Prepared For All The Changes Ahead

As CPAs continue to learn more about changes being made to the tax laws on both the federal and state levels, it’s important to be sure that your personal and business finances are in good hands. At PNF, we offer a wide range of business services that can help prepare you for Tax Day. The more you plan for the future, the more you can save in the long run.

disclaimer

The above is general information only and not to be relied upon as accounting advice. It does not create an attorney client relationship, nor should it be relied upon as tax advice or consultation with an accountant.

·  The news site hosting this press release is not associated with PNF. It is merely publishing a press release announcement submitted by a company, without any stated or implied endorsement of the product or service.

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