Late in the evening of July 1, Governor Murphy signed the fiscal year 2019 budget after long negotiations with state legislators.

Because the budget was passed at the eleventh hour, much of it has not been assembled into readable form and experts are still deciphering some of the details, many of them important. Nonetheless, many of the main points are clear in outline form, which are listed below. The NJCPA will report more on the budget’s details, particularly the changes in tax law, as they become available.

Highlights of the budget:

• An increase in the income tax rate to 10.75 percent for taxpayers with income of $5 million and above
• A corporate business tax surcharge of 2.5 percent for the next two years and 1.5 percent in years three and four, as well as adoption of a combined reporting standard
  • CBT statute (includes amendments made to the original bill; underlined text indicates additions and bracketed text indicates deletions)
  • Governor Murphy's statement about the changes to the CBT bill
• Authorization for the New Jersey Division of Taxation to hold a 90-day tax amnesty program this year
• An increase in the state property tax deduction cap from $10,000 to $15,000
• More funding for the Homestead property tax relief program
• An increase in the Earned Income Tax Credit (EITC)
• A new Child and Dependent Care Tax Credit
• No increase in the sales tax rate, however short-term housing rentals (e.g. Airbnb) will now be subject to sales tax. Plus the state will see more sales-tax revenue thanks to a recent U.S. Supreme Court decision that will allow New Jersey and other states to more aggressively tax online sales.
• A new surcharge on Uber and Lyft rides
• A new tax on e-cigarettes and tobacco
• More funding for NJ Transit
• Modifications to the school funding formula
• Funding for free community college for lower-income residents

As more information becomes available, we will provide updates. In the meantime, if you have any questions or concerns don't hesitate to reach out to your trusted Smolin advisor.