New Jersey Governor Chris Christie, along with Senate President Stephen Sweeney and Assembly Speaker Vincent Prieto, announced that an agreement has been reached to implement broad-based tax cuts, in addition to an increase in the state's gas tax.
Gross income tax. The bipartisan agreement provides for an increase of the earned income tax credit to 35% of the federal benefit amount beginning in the 2016 tax year, in addition to a personal income tax exemption to all New Jersey veterans honorably discharged from active military service or the National Guard. The agreement also provides for an increase in the gross income tax exclusion for pension and retirement benefit income over four years to $100,000 for joint filers, $75,000 for individuals, and $50,000 for those persons filing a married/filing separate return.
Comment: This is good for New Jersey as retirees will be able to save on taxes to their retirement. They can use their savings to pay high New Jersey property taxes!
Sales tax. As of January 1, 2017, the state's sales tax is reduced from 7% to 6.875%, and as of January 1, 2018, the tax will be further reduced from 6.875% to 6.625% for a total sales tax reduction of 0.375%.
Estate tax. The agreement phases out the estate tax over the next 15 months beginning on January 1, 2017, with a $2 million exclusion. The tax will be eliminated as of January 1, 2018.
Comment: Finally the Governor and the legislature has seen the light. Now they have to work on other high and unreasonable taxes.
Notwithstanding taxpayers will still have to contend with the income tax on trust income over $10,000.
Gasoline tax. The gasoline tax will be increased by 23¢ per gallon of gas sold or used in the state. Currently, gasoline is subject to a tax of 10-1/2¢ per gallon.
Now the question as to whether you should move to another "tax free" state like Florida becomes much closer.