New Jersey Governor, Phil Murphy, has released his proposed budget for the state’s 2020 Fiscal year. The main tax item included in the budget was the expansion of the highest tax bracket of 10.75% to include all taxpayers with income of a million dollars or more. New Jersey’s current tax law, passed last year, applies the 10.75% rate to taxpayers with income of $5 million or more. The governor also proposed this same “millionaire’s tax” as part of last year’s budget but ultimately settled on the $5 million threshold after negotiations with the State’s legislature.
The budget also included a few additional tax-related measures designed to assist low and middle-income taxpayers. The budget proposes funding for property tax relief and expansion of the earned income tax credit. The earned income tax credit expansion would increase the credit to 39 percent of the Federal credit. Additionally, the budget proposal includes a “corporate responsibility fee” of $150 for large employers (more than 50 employees) for any employees relying upon Medicaid for health insurance coverage.
It will be interesting to see if the “millionaire’s tax” is ultimately passed into law this year after being limited to taxpayers with $5 million or more in income after last year’s attempt to pass the tax hike and how these high-income taxpayers would react to the law change.