Here's How New NJ Budget, Taxes Will Impact You
NEW JERSEY — Gov. Phil Murphy and the state Legislature have finally agreed on a new budget that's going to force thousands of New Jersey residents to pay more while giving others a much longed-for financial break.
Murphy and the state Legislature have agreed to a list of new taxes and rebates that will raise revenue from millionaires while also saving money for people who have children.
At the same time, lawmakers nixed a list of taxes — such as levies on cigarettes and firearms — that Murphy wanted to fill the state's coffers that have been depleted by the coronavirus crisis and ensuring business shutdowns.
Committee hearings were scheduled to take place Tuesday. If the budget gets out of committee in each chamber, a full vote will occur Thursday, officials said.
A spokesperson for Murphy didn't know when details for the budget will become publicly available — only that they'll get released before Sept. 30. Officials must pass the budget by October.
Republicans have complained that tax increases are coming at the wrong time for New Jerseyans, many of whom are still out of work because of the pandemic.
“For all of the governor’s talk about rebates, there’s not a single penny in the budget proposed by Democrats to fund the checks that taxpayers have been promised in exchange for tax increases,” said Sen. Michael Testa, R-Cape May.
“The taxes will be implemented this year, but the rebates won’t be. In fact, all taxpayers are getting is a hazy promise that the rebates might be funded in the next budget in the summer of 2021. It’s a classic bait and switch that Governor Murphy is pulling on New Jerseyans to raise taxes.”
But Democrats say the budget plan is targeted toward helping the people who need it the most: the poor and middle class.
“The agreement that we reached will provide much needed tax relief for so many who can truly use a break,” said Assembly Speaker Coughlin. “It has always been a priority of all of us to help the middle class. I am pleased to join with the governor and the Senate president in support of increasing the tax rate on those earning more than a million dollars. The small increase has long been part of Governor Murphy’s plan of tax fairness and it will generate much needed revenue that will allow assistance to those desperately in need.”
Here's a list of taxes and rebates that will be approved:
Millionaire's tax
Murphy announced last week that New Jersey reached a deal on passing a millionaire's tax. A 10.75 percent marginal tax rate currently imposed on income over $5 million would apply for taxable income starting at $1 million.
This proposal is expected to raise $390 million in FY 2021, officials said. Read more: Gov. Phil Murphy Announces Deal On NJ Millionaire's Tax, Rebates
Murphy provided few details on the budget when asked at Monday's state coronavirus briefing. But he reiterated the millionaire's tax as a focal point.
"The one piece of this that we were very happy to unveil was the millionaire's tax, so it'll be a part of it," he said. "Beyond that, stay tuned."
HMO tax
The tax increases HMO assessment to 5 percent: This proposal would increase the current annual assessment on net written premiums of HMOs from 3 to 5 percent and raise an estimated $102.7 million in FY 2021.
Rebates for people with children
Rebates are available to single filers making up to $75,000 and families earning up to $150,000, but each must have at least one dependent, according to state officials. The rebates will be worth up to $500.
State officials and lawmakers said the rebates will essentially only be available to parents with children.
When taxpayers will receive those checks depends on the language in the legislation. But state officials anticipate them for early in FY 2022, after July 1.
Here is what lawmakers did not approve:
Increase the cigarette tax to $4.35 per pack
This tax would have yielded an estimated $143.1 million for eight months of FY 2021. New Jersey's tax rate would have matched that of neighboring New York and Connecticut, but would have been below the combined state and municipal rate in New York City, officials said.
Firearms and ammunition taxes and fees
Firearms and ammunition taxes and fees: The governor proposed raising firearm fees, many of which have not been updated since 1966, and implementing excise taxes on firearms and ammunition. The hikes were estimated to raise $6.3 million over an eight month period in FY 2021, officials said.
Opioid assessment
This proposal would have raised an estimated $15 million in FY 2021 by increasing registration fees and penalties and levying new assessments on opioid drug manufacturers and wholesalers, officials said.
Restore sales and use tax on limousine services
Currently, these services are not subject to New Jersey sales tax. This proposal would have raised an estimated $13 million over eight months of FY 2021.
Undo the exemption and cap on sales and use tax for new and used boats
Currently, boat sales are provided a 50 percent sales tax exemption and the total tax is capped at $20,000 per sale. The restoration of the full sales tax and elimination of the cap would have yielded an estimated $7.0 million over eight months of FY 2021.
Restore sales and use tax on limousine services
Currently, these services are not subject to New Jersey sales tax. This proposal would have raised an estimated $13 million over eight months of FY 2021.
This article originally appeared on the Ocean City Patch
