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12/12/2017
New Jersey Summarizes its Tax Changes for the Fiscal Year 2018
Synopsis
The New Jersey Division of Taxation (the Division) recently provided a summary of several tax law changes that are scheduled to be effective on January 1, 2018 and later years.
The new tax law changes include two new tax credits, the revision of the Angel Investor Tax Credit, a gradual increase in the retirement exclusion, an exemption of $3,000 to veterans’ who are honorably discharged or released from active duty from the U.S Armed Forces, the phasing out of the New Jersey Estate Tax, and a reduction in the sales and use tax rate for tax years 2017 and 2018.
Business Tax
The Division has added two new tax credits to the Corporate Business Tax Return:
- Business Employment Incentive Program Credit (Form 324); and
- Public Infrastructure Credit (Form 325)
Businesses that qualify for these credits are required to attach Forms 324 and 325, respectively, to their Corporate Business Tax Returns.
In addition, the Angel Investor Tax Credit has been revised to allow a credit for a qualified investment in a New Jersey emerging technology business holding company if 100% of the investment is transferred from the holding company to the New Jersey emerging technology business. This credit will be applied retroactively to qualified investments made for tax years beginning on or after January 1, 2012.
Gross Income Tax
Retirement Exclusion: The retirement income exclusion is available to taxpayers with $100,000 or less in gross income for the entire year and who are 62 or older or blind or disabled. The exclusion gradually increases each year until tax year 2020 as follows:
- For 2017, $30,000 for single taxpayers and $40,000 for married filing jointly taxpayers and $20,000 for married filing separately taxpayers.
- For 2018, $45,000 for single taxpayers, $60,000 for married filing jointly taxpayers and $30,000 for married filing separately taxpayers.
- For 2019, $60,000 for single taxpayers, $80,000 for married filing jointly taxpayers and $40,000 for married filing separately taxpayers.
- For 2020, $75,000 for single taxpayers, $100,000 for married filing jointly taxpayers and $50,000 for married filing separately taxpayers.
Personal Exemption for Veterans: An exemption of $3,000 has been provided to veterans’ who are honorably discharged or released from active duty in the Armed Forces of the United States.
Sales and Use Tax
The New Jersey sales and use tax rate was reduced from 7% to 6.875% for taxable sales occurring on and after January 1, 2017. Additionally, the sales and use tax rate will decrease to 6.625% for taxable sales occurring on and after January 1, 2018.
Estate Taxes
On January 1, 2018, the New Jersey Estate Tax will be completely phased out. This means that individuals dying on or after January 1, 2018 can leave their estate to their heirs without being subject to any New Jersey Estate Tax.
Annual Deduction for Veterans and Property Tax Exemption for Disable Veterans
The eligibility for the exemption and deduction will be extended to members of the U.S. Armed Forces assigned to the rescue and recovery mission at the World Trade Center.
Property Tax Assessment
Beginning with tax year 2017, any notice of annual assessment or change in assessment issued to a property owner must contain the deadline to file an appeal in boldface type.
Contact
For more information, please contact Corey L. Rosenthal, Principal, State and Local Tax Services at Corey.Rosenthal@cohnreznick.com or 646-625-57293 or Scott Smith, Director, State and Local Tax Services at Scott.Smith@CohnReznick.com or 973-364-7720 or Harry Golematis, Director, State and Local Tax Services, at Harry.Golematis@CohnReznick.com or 973-364-7891.
Subject matter expertise
Corey Rosenthal
JD, Principal, Practice Leader, State and Local Tax (SALT) Services
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Any advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues. Nor is it sufficient to avoid tax-related penalties. This has been prepared for information purposes and general guidance only and does not constitute legal or professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice specific to, among other things, your individual facts, circumstances and jurisdiction. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its partners, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.