Approved NJ Budget for FY 2019
The FY 2019 New Jersey State budget, which was recently approved, will increase taxes and affect businesses and individuals throughout the state. Below are the provisions that are set to fund the $37.4 billion FY 2019 NJ budget:
- Corporation Business Tax (CBT) Changes
- A four-year CBT surtax on taxpayers will come into effect for those with an allocated income over $1 million. The surtax is set at 2.5% for tax years beginning on or after January 1, 2018 – December 31, 2019. From January 1, 2020 – December 31, 2021 the surtax is set at 1.5%.
- For the first two years, companies making more than $1 million will have a surtax of 2.5%, making the new overall tax of 11.5%. The new overall tax for the second two years will be 10.5%.
- Gross Income Tax (GIT) Changes
- New Jersey’s State income-tax deduction for property taxes will increase from $10,000 to $15,000.
- The New Jersey multimillionaires tax will have a new top income tax bracket of 10.75% for those with an income over $5 million.
- Tax Amnesty
- The Director of the Division of Taxation will now need to establish a 90-day State tax amnesty period that must end by January 15, 2019. This applies to all taxpayers with liabilities for returns due on or after February 1, 2009 and before September 1, 2017.
Other bills, such as the Jersey City Employer Payroll Tax Bill, PA/NJ Reciprocal Income Tax Agreement and the Internet Sales Tax all await further action by the Governor. We will be sure to inform you on further updates as additional information becomes available.
Supreme Court Rules Retailers Can Collect Sales Taxes Online
In a 5-4 decision at the end of June, the U.S. Supreme Court ruled that states can now collect sales taxes from online retailers, disregarding their physical presence within those states.
This decision overturned a previous 25+ year Supreme Court ruling that required “physical presence” for states to require a business to register and collect sales and use tax. This Overruling will now affect both consumers and sellers that have avoided sales taxes previously.
Justice Anthony Kennedy wrote that the ruling was overruled, as the “internet’s prevalence and power have changed the dynamics of the national economy” and that the expansion has “also increased the revenue shortfall faced by states seeking to collect their sales and use taxes.”
As always, please feel free to contact one of our tax professionals if you have any questions about the NJ 2019 Budget or the new Supreme Court ruling.
Have questions? Give us a call at (973) 328-1825.