Some Positive Changes that come with the recent New Jersey gas tax hike

by Walter Daskowski

On October 7, the New Jersey State Legislature approved a 23 cent gas tax increase, the state’s first such tax hike since 1988. The tax per gallon will now be 37.5 cents, up from 14.5 cents. The increase, which went into effect on November 1, will drive the state’s gas tax from the second lowest to the seventh highest, though still below New York and Pennsylvania.

Lawmakers have specified that they approved the measure to finance an eight-year, $16 billion Transportation Trust Fund for road, bridge, and rail projects across the state. Under the transportation plan outlined by Chris Christie, $2 billion would be devoted each year to the Trust Fund; the gas tax would produce around $1.2 billion of that yearly revenue, depending on consumption levels, and the state would borrow the remaining $800 million.

As part of the deal, lawmakers voted on the following tax changes:

Elimination of the Estate Tax
The $675,000 threshold to be taxed onthe transfer of estates will increase to $2million on January 1, 2017, and eliminatedaltogether after January 1, 2018.No changes have been made to the NewJersey Inheritance Tax.

Reduction in Sales Tax, from 7% to 6.875% on January 1, 2017, then to 6.625% on January 1, 2018.

Boost in the Earned Income Tax Credit for low-income workers, from30% of the federal level to 35%.

A Larger Exclusion for Pension and Retirement Income
The income tax exclusion (how much you have to make before the tax kicks in) will increase to $100,000 for joint filers, $75,000 for individuals, and $50,000 for married couples filing separately. There will also be a $3,000 income tax exemption for veterans who were honorably discharged from active service in the military or National Guard.

The hope is that the combination of estate tax and retirement income provisions will discourage residents and businesses from moving out of New Jersey and encourage others to move into the state to spend their retirement years. Only the future will tell.

Daszkowski, Tompkins, Weg & Carbonella CPA P.C. 1303 Clove Road, Staten Island 718.981.9600 / wdcpa.com