The good news is that New Jersey averted a government shut down and finally agreed to compromises that led to the acceptance of a new budget. As in most negotiations, no one is a clear ‘winner’ or ‘loser’ but each agreed to make a deal that would enable the state to move forward for the next twelve months.
After filtering out all the noise, New Jerseyeans want to know how they will be affected by the new spending plan, which includes more than $1.5 billion in newly generated tax revenue.
Where will the additional revenue needed for the budget come from?
In order to accommodate the increase of hundreds of millions of dollars in investments in the state in areas such as schools (including an updated education proposal for funding public schools and pre-education), transit, government worker pensions, greater property tax rebates and a down-payment on the evolution toward funding free community colleges, new taxes will have to be added and some existing taxes will have to rise.
But concern over exactly which taxes are increasing, and what is being taxed for the first time, is what is important right now.
What are some of the key areas where change will be felt most?
The pinch of a tax hike will be felt across a wide variety of situations. By drilling down a little deeper we can see what this could mean for you.
Millionaires Tax
The so-called ‘millionaires tax’, which will impact 1760 NJ taxpayers, will start at $5 million instead of $1 million but will now be 10.75%, up from the previous rate of 8.97%
Airbnb Tax
The state will now apply a higher tax, including sales tax and local hotel surcharges, for Airbnb and other short term stay facilities.
Uber/Lyft Tax
Uber and Lyft will be making changes as well. These ride sharing services will include a 50 cent surcharge for single passenger trips and a 25 cent additional charge for shared rides.
E-cigarettes Tax
Liquid nicotine will be taxed under the new budget at 10 cents per millileter but details are still being finalized.
Corporate Tax
A 2.5% corporate tax surcharge will also be in place this year and next but will be lowered to 1.5% for the next two years following that.
Shopping Bag Tax
Even paper and plastic shopping bags are on the hit list. If you do not want to spend five cents each, start bringing your own reusable bags when shopping at your favorite retailer!
So what didn’t change?
There are some taxes that escaped and as such will not be going up this year. They are:
- Sales tax – this will remain at 6.625%
- No sales tax will be imposed on short-term home rentals on the Jersey Shore
- No gun-related fee increases
There is much to digest here – and there is both “good news” and “bad news” but the bottom line is that without these changes the future investments in the state’s infrastructure would not be funded.
If you have any questions, please call us at 973-994-9494 and we will be happy to help you.
