New Jersey Estate Tax phase out and repeal becomes official: Governor signs new measures into law. Gas tax increase, increase in the retired income tax exclusion, decrease in sales and use tax rate, new veteran’s exemption, and increase in the earned income tax credit are also part of the legislation.
On Friday, October 14, 2016, Governor Christie signed into law New Jersey’s controversial gas tax increase (23 cents a gallon, effective November 1, 2016) in order to replenish the Transportation Trust Fund. As part of the new legislation, the New Jersey Estate Tax, as I wrote in my October 9, 2016 blog post, is to be phased out and eliminated. Specifically, the New Jersey Estate Tax exclusion amount is going to rise from an equivalent of $675,000.00 in 2016 to a “true” exclusion amount of $2,000,000.00 on January 1, 2017 for the estates of year 2017 decedents. The New Jersey Estate Tax is repealed for the estates of decedent’s dying on or after January 1, 2018. The New Jersey Transfer Inheritance Tax was not affected by this new legislation, and remains in place.
Aside from the gas tax increase which motorists will encounter every time they go to the pump, retired New Jersey residents should look favorably upon the pension and retired income tax exclusion which will see an increase phased in over four years:
Filer Type Present 2017 2018 2019 2020
Joint $20,000 $40,000 $60,000 $80,000 $100,000
Individual $15,000 $30,000 $45,000 $60,000 $ 75,000
Separate $10,000 $20,000 $30,000 $40,000 $ 50,000
The New Jersey sales and use tax rate will decrease from 7% to 6.875% effective on January 1, 2017 and then from 6.875% to 6.625% on January 1, 2018.
The legislation provides for a new $3,000.00 annual personal exemption under the New Jersey gross income tax for any individual New Jersey gross income taxpayer who is a veteran honorably discharged or released under honorable circumstances from active duty in the Armed Forces of the United States, a reserve component thereof, or the National Guard of New Jersey in a federal active duty status.
The New Jersey Earned Income Tax Credit (NJ EITC) under the gross income tax will increase from 30% to 35% of the federal benefit amount beginning in Tax Year 2016.
October 15, 2016 Barry M. Benson, Esq.