Although the final step of being signed into law by Governor Chris Christie had not taken place as of Monday, October 10, 2016 we want to alert you that the bill on TTF funding, the gas tax increase, the elimination of the NJ estate tax and other tax reform measures were approved by the NJ Senate and Assembly on Friday, October 7.

The passage of this measure has important implications for all of Sobel & Co.'s clients and colleagues. One high profile aspect of the plan is that it will replenish New Jersey's depleted Transportation Trust Fund by raising the state's gas tax by 23 cents per gallon. The increase in the state's gas tax, which at its current mark of 14.5 cents per gallon is the second-lowest in the nation, will go toward funding an eight-year, $16 billion TTF that will include another $16 billion in matching Federal dollars.

The governor, who agreed to terms on the deal last week with Senate President Steve Sweeney (D-West Deptford) and Assembly Speaker Vincent Prieto (D-Secaucus), is expected to promptly sign it.  If it becomes law as anticipated, in exchange for the gas tax hike the plan calls for eliminating the estate tax. That process will include an increase to $2 million for the NJ estate tax exemption amount as of January 1, 2017 before the tax is eliminated entirely the following year on January 1, 2018.  In addition, the new plan will raise the Earned Income Tax Credit program from 30 percent to 35 percent of the Federal amount, adding exemptions for veterans, increasing retirement income exclusions on pension and retirement income over four years to $100,000 for joint filers, $75,000 for individuals, and $50,000 for those married couples who file separately and will also reduce the state's sales tax from seven percent to 6.625 percent over two years. 

  

In an NJBIZ article published on October 7, 2016, journalist Andrews George shares this quote with readers, "This is one of the most significant investments in New Jersey's infrastructure and economy in recent history," said state Sen. Paul Sarlo (D-Wood-Ridge), who earlier in the year sponsored a similar bipartisan bill in coordination with state Sen. Steven Oroho (R-Sparta). "This is an investment plan that addresses the transportation needs that are so important to New Jersey at the same time it invests in jobs and growth. It will provide an immediate impact in jobs and economic activity and will help sustain long-term economic growth."

"New Jersey is one of only two states with both an inheritance tax and an estate tax, which drives capital, income and jobs out of New Jersey," added Oroho. "Parents and grandparents feel compelled to move out of New Jersey, away from their families, to keep more of their hard-earned assets to pass on to their children and grandchildren. By keeping these resources in New Jersey, we will improve our economy and general state revenues."

We will keep you posted on the progress of this new tax law.