If you live in New Jersey you may have noticed that gasoline prices rose substantially this week. This is the result of a transportation funding bill signed into law by Governor Christie on October 14, 2016. This bill also included the repeal of the New Jersey Estate Tax. Here is a summary of the new laws that include several tax cuts and the one tax increase.
New Jersey increased its gasoline tax by 23 cents a gallon to 37.5 cents a gallon. The 23-cent gas tax hike, along with increases in diesel fuels and non-motor fuels, is expected to produce about $1.23 billion annually. This revenue will be used to finance an eight year, $16 billion transportation program. The Transportation Trust Fund, which pays for road, bridge, and rail work across the state, ran out of money for new projects over the summer. A referendum on the Nov. 8 ballot will ask voters to amend the state Constitution to dedicate the new revenue to transportation projects. Prior to this increase, the New Jersey gasoline tax was the second lowest in the country. It will now be the seventh highest in the country.
The New Jersey Estate Tax has been repealed effective January 1, 2018. The current $675,000 exemption will increase to a $2 million exemption on January 1, 2017. The Estate Tax will be eliminated as of January 1, 2018. The New Jersey Inheritance Tax is still in effect. This is a tax imposed on transfers to beneficiaries who are not spouses, parents, children, or grandchildren (i.e., nieces, nephews, siblings, friends, etc.). New Jersey Inheritance Tax rates start at 11% and go as high as 16%.
As part of the new law, there is a tax break for retirees. There will be an increase in the New Jersey gross income tax exclusion on pension or retirement income over four years (in 2020) to $100,000 for couples, $75,000 for individuals, and $50,000 for married taxpayers who file separately.
On January 1, 2017, the sales tax will be reduced from 7% to 6.875%. The sales tax will be further reduced to 6.625% on January 1, 2018.
Earned Income Tax Credit:
The Earned Income Tax Credit program will be increased from 30% to 35% of the Federal limit in 2016 and will now include an exemption for veterans.
If you have any questions about the new law or want to discuss how the Estate Tax law changes might impact your estate planning, please reach out to me at (732) 800-0163 or firstname.lastname@example.org.