RECENT NEW JERSEY TAX UPDATES

Effective October 1, 2018, New Jersey sales and use tax was imposed on transient accommodations. The definition of transient accommodations included living/sleeping space for the lodging of occupants for a term of less than 90 consecutive days.  This new law became known as the “Jersey Shore Rental Tax”.  Individuals who owned any type of short-term residential rental property now had to charge NJ sales tax on their rentals. However, in August of 2019, NJ enacted legislation (effective 8/9/19) that limited the scope of transient accommodations that would be subject to collecting the sales and use tax to rentals of professionally managed units and rentals obtained through a transient space marketplace (such as Air B&B) or travel agency.  This meant that an individual homeowner who was renting their property directly and collecting the rental payment directly no longer had to charge NJ sales tax on their short-term rental income.  However, this law only applied prospectively.  Individual homeowners or their short-term occupants could not request refunds of previously charged and or paid NJ sales tax.

**************************************************************************Each year, both employees and employers are required to contribute to the New Jersey Unemployment, Disability, and Family Leave Funds.  For 2019, the combined tax rate for these various funds was 0.675% for an employee’s share.  The employer’s tax rate would vary based on their experience rating.  The maximum wages, per employee, in 2019, that is subject to the tax is $34,400.  The wage base is adjusted annually, based on inflation.  The current 2019 employee contribution for these various funds is 0.675%, or $232.20 on $34,400 of payroll.  For 2020, the taxable wage base for unemployment tax only will increase to $35,300, at a tax rate currently of 0.00425%.  However, the tax rate for the Disability and Family Leave Funds significantly increases to $134,900. The tax rate for these two funds is 0.0017% and 0.0008%, respectively. In 2020, the maximum employee assessment to the Unemployment Fund will be $150.02 and the combined maximum contribution to the Disability and Family Leave Funds will be $337.25 for employee withholdings only.  This means that for a person earing $134,900 or more in 2020, their combined assessment will increase from a total of $232.20 in 2019 to $487.27 in 2020.  For employers, this will mean that their assessment to the Disability Fund, which they are taxed at the rate of 0.005%, on the combined total of their employees’ base wages, will also increase.  For every employee that earns in excess of 35,300, up to $134,900, the employer’s expense will increase from $172 in 2019 up to $674.50 in 2020, per employee.

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