- Individual income tax provisions
- Increase the limit on deductions for property tax from $10,000 to $15,000.
- Increase the earned income credit from 35% to 40% of the Federal earned income credit amount. This will start in 2018.
- Establishes a child and dependent care tax credit for families with incomes under $60,000. The credit will be 10%-50% of the amount of the Federal tax credit, depending on the level of NJ taxable income, beginning in tax year 2018.
- Increase the top marginal tax rate for individuals with more than $5 million of taxable income from 8.97% to 10.75%, starting with the 2018 income tax return.
- New Jersey will not allow the new 20% Federal tax deduction for income from pass-through entities.
- Sales tax
- Tax rate will remain at 6.625%.
- Short-term housing rentals (such as Airbnb) are now subject to sales tax.
- Recent U.S. Supreme Court ruling will allow New Jersey and other state to more aggressively tax online sales for companies that have no physical presence in that state.
- New surtaxes
- Taxes on rideshare apps, as well as on liquid nicotine for e-cigarettes.
- Corporation income tax provisions
- The top marginal tax rate for corporations with taxable income of over $5 million will increase from 9% to 11.5% over the next two years. The top tax rate will then decrease to 10.5% after two years and revert to 9% after four years. These changes will start with tax years beginning on or after January 1, 2018.
- Corporations will be taxed on their overall profits, rather than those of their NJ-based entities only. New Jersey will now have combined reporting for groups of corporations with common ownership that are engaged in a unitary business, where one company is subject to tax in New Jersey. Also, sales of services will be sourced to the state where the service is being received (market-based sourcing). Both of these tax provisions are effective for tax years beginning on or after January 1, 2019
- New Jersey tax amnesty
- The NJ Division of Taxation has been authorized to establish a 90 day tax amnesty period that will end no later than January 15, 2019.
- The program applies to any taxpayers with liabilities that were due on or after February 1, 2009 and prior to September 1, 2017.
- To receive amnesty, a taxpayer has to make full payment of any tax owed and 50% of any interest due as of November 1, 2018.
- All previously unfiled returns must be filed during the amnesty period.
- Amnesty is not available for any taxpayer who at the time of payment is under criminal investigation or any charge for any state tax matter.
- If the amnesty rules are followed, all penalties and collection fees will be forgiven, with the exception of criminal and civil fraud penalties.
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