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Division of Taxation

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Summary of New Laws 2004

The tax legislation summarized below was enacted either as part of the State of New Jersey's 2005 Budget or subsequent to the passage of the Budget. For additional information on the individual laws, click on the link at the bottom of each individual summary.

Homestead Rebate Benefits Increased
L.2004, c.40. enacted as part of the new FAIR (Fair And Immediate Relief) program, provides increased property tax relief benefits to New Jersey homeowners and tenants. Beginning with the rebates paid in 2004 for applications filed for tax year 2003, the rebate amounts are as follows:

Homeowners age 65 or over or disabled:  
Income: Rebate Amount:
$0 to $70K Min. rebate of $1,000, max. rebate of $1,200
Over $70K but not over $125K Min. rebate of $600, max rebate of $800
Over $125K but not over $200K Rebate equals $500
Homeowners under age 65 and not disabled:  
$0 to $125K Min. rebate of $600, max rebate of $800
Over $125K but not over $200K Rebate equals $500
Tenants age 65 or over or disabled:  
$0 to $70K (married filing joint) Min. rebate of $150, max. rebate of $825
$0 to $35K (single filers) Min. rebate of $150, max. rebate of $825
$0 to $35,000 (single filers) Min. rebate of $150, max. rebate of $825
$35K to $100K (single filers) Rebate equals $150
$70K to $100K (married filing joint) Rebate equals $150
Tenants under age 65 and not disabled:  
$0 to $100K Rebate equals $150


Increased Gross Income Tax on High-Income Taxpayers
L. 2004, c.40, enacted June 28, 2004 and effective immediately, increases the gross income tax rate for the highest-income taxpayers. It establishes an additional tier in the graduated gross income tax table for taxpayers with taxable income above $500,000, providing that the portion of income exceeding $500,000 shall be taxed at a rate of 8.97%.

Outdoor Advertising Fee Changes

L. 2004, c.42, enacted June 29, 2004 and effective immediately, provides for gradual reduction in the rate of the fee imposed on outdoor advertising signs and provides that entities that are treated as exempt organizations for sales and use tax purposes shall be exempt from the outdoor advertising fee as well. It also subjects outdoor advertising signs to real property tax.


Transitional Energy Facility Assessment Phase-Out Schedule
L. 2004, c.43, enacted June 29, 2004 and effective immediately, extends the end date of the phase-out period for this assessment to 2010 and modifies the annual rates.

New Tire Fee
L. 2004, c.46, enacted June 29, 2004 and effective August 1, 2004, imposes a fee of $1.50 on the sale of new motor vehicle tires, including tires sold as a component part of a new motor vehicle either sold or leased in New Jersey.


CBT Net Operating Loss Changes
L. 2004, c.47, enacted June 29, 2004 and effective immediately, provides that for privilege periods beginning during calendar year 2004 and calendar year 2005, a limited net operating loss (“NOL”) deduction is allowed for the privilege period. The deduction permitted may reduce entire net income by up to 50%. To the extent that any NOL is disallowed by reason of this limiting provision, the date on which the disallowed deduction would otherwise expire is extended by a period equal to the period of disallowance.


Mobile Telecommunications Fee
L. 2004, c.48, enacted June 29, 2004 and effective immediately, applicable to billing periods ending on or after July 1, 2004, for most services, and to billing periods ending on or after August 1, 2004, for certain services, imposes a $.90 fee on periodic billing to mobile telecommunications and telephone exchange customers. The fee shall be used to fund the “911” system and certain other emergency response systems.


HMO Assessment
L. 2004, c.49, enacted on June 29, 2004 and effective immediately, establishes an interim assessment on health maintenance organizations, and mandates a comparative study of the equity of various taxes imposed on all health care insurance companies.

Spill Tax Changes
L. 2004, c.50, enacted June 29, 2004, provides for tax rate increases effective immediately and retroactive to transfers occurring on and after January 1, 2004. The new tax rate for petroleum products, hazardous substances containing precious metals, elemental phosphorous and qualified antimony or antimony trioxide for fire retardants is $0.023 per barrel transferred. The new tax rate for hazardous substances other than the above listed is 1.53% of the fair market value of the substance transferred.


Air Toxics Surcharge
L. 2004, c.51, which was enacted on June 29, 2004 and took effect immediately, imposes a new annual surcharge, ranging from $.10 to $10.00 per pound of toxic substance, depending on the category of toxin, on toxic air emissions at certain kinds of facilities. A portion of the revenue from this fee will be used to improve security at nuclear power plants in the State.


Electronic Funds Transfer Threshold
L. 2004, c.52, enacted June 29, 2004 and effective immediately, lowers the threshold for mandatory use of electronic transfer as the means of filing state taxes of electronic transfer to those taxpayers whose prior year liability was $10,000 or more.

Cosmetic Medical Procedures Tax
L. 2004, c.53, which was enacted on June 29, 2004 and became effective immediately, but remains inoperative until September 1, 2004, imposes a new 6% gross receipts tax on the purchase of certain cosmetic medical procedures, which are medical procedures performed in order to improve a person’s appearance, but without significantly serving to prevent or treat illness or disease or to promote proper functioning of the body. “Cosmetic medical procedures” do not include reconstructive surgery or dentistry to correct or minimize abnormal structures caused by birth defects, developmental abnormalities, trauma, infection, tumors or disease. The tax will be collected from the patient by the cosmetic medical service provider, who will be required to remit the tax quarterly.


Ambulatory Care Facility Assessment (administered by Dept. of Health and Senior Services)
L. 2004, c. 54, imposes an annual fee on the gross receipts of certain licensed ambulatory care facilities. Note: This fee is assessed, collected, and administered by the Department of Health and Senior Services (tel. 609-292-7834), not by the Division of Taxation.

Estimated Tax on Income from Sale of Real Property by Nonresidents
L. 2004, c.55, enacted on June 29, 2004 and effective August 1, 2004, supplements the Gross Income Tax Act by requiring nonresidents who derive income from the sale of real property in this State to pay estimated gross income tax. The Act provides that a county recording officer at the time the deed is filed must be presented with evidence of filing or payment of estimated tax with respect to the gain realized from the sale.

Bank Account Information
L. 2004, c.56, which was enacted on June 29, 2004 and took effect immediately, requires financial institutions, in response to a request by the Director of the Division of Taxation, to transmit electronically a report regarding the accounts of tax debtors.

Contractor Registration Changes

L. 2004, c.57, enacted June 29, 2004 and effective immediately, but remaining inoperative until September 1, 2004, extends to local government agencies the requirement that public entities may enter into public contracts with providers of goods and services only if they have presented documentation showing that they are registered with this State for tax purposes. The Act also provides that these providers of goods and services and their affiliates must remit sales or use tax on tangible personal property delivered to a retail buyer in this State.

License Suspension of Tax-Noncompliant Businesses
L. 2004, c.58, which was enacted on June 29, 2004 and took effect immediately, provides a mechanism whereby the Division of Taxation will receive information regarding the identity of entities (including individuals) that are holders of licenses to engage in a particular profession, trade or business in this State, and will then examine their tax records to identify any areas of non-compliance and will give them an opportunity to contest their indebtedness or delinquency or to come in compliance. The Act authorizes the Director to demand the summary suspension of a professional, occupational or business license of an entity that already has an unsatisfied judgment for tax indebtedness, or who fails to remedy any tax indebtedness after receiving the notice provided for under this Act.

CBT Decoupling
L. 2004, c.65 , enacted June 30, 2004 and effective immediately, affects certain expense deductions and depreciation permitted on the NJ CBT-100. For property placed in service on and after January 1, 2004, the law decouples the federal ceiling from the amount permitted to be deducted as an expense for New Jersey corporation business tax purposes under IRC section 179. Returns for periods ending after December 31, 2003 are affected, if property has been placed in service on or after January 1, 2004 but during the privilege period. Since the amount of the deduction under prior law was $25,000, that is the limit of the IRC section 179 deduction for New Jersey purposes. The Act also makes clear that property placed in service after September 10, 2001 will not receive the bonus depreciation treatment.

Realty Transfer Fees
L. 2004, c. 66, enacted June 30, 2004 and effective immediately, applicable to realty transfers taking place on or after August 1, 2004, imposes an additional “general purpose fee” at a graduated rate, on grantors of realty where the value of the deed is more than $350,000, and makes other changes in fees and clarifications in the provisions governing realty transfer fees.


Cigarette Tax Increase
L. 2004, c. 67, enacted June 30, 2004 and effective July 1, 2004, increase the cigarette tax to $.12 per cigarette, increasing the tax on a pack by $.35.

L. 2004, c. 75, enacted July 1, 2004 and effective immediately, establishes a new urban enterprise zone, the 32 nd, located in New Brunswick in Middlesex County.

Report for Study Commission on Discrimination
L. 2004, c. 79, enacted July 2, 2004 and applicable to studies already begun before that effective date, permits the Secretary of State to request from the Division of Taxation, and requires the Division to supply, a report containing basic information, not including tax information, regarding public employees and contractors. This information will be used by the Governor’s Study Commission on Discrimination in State Employment and Contracting, solely in assessing the nature and scope of any past or present discrimination.

Property Tax Convention Task Force
L. 2004, c. 85, enacted on July 7, 2004 and effective upon enactment, establishes a Property Tax Convention Task Force to study and make recommendations regarding reform of the local real property tax system and appropriates $250,000 to fund its activities.

Cigarette Tax Act Change
L. 2004, c. 96, enacted July 9, 2004 and effective October 1, 2004, amends the Cigarette Tax Act to prohibit the sale of cigarettes in packs of fewer than 20.


Aid to Highlands Region
L. 2004, c.120, enacted August 10, 2004, and effective on that date, establishes a Highlands Municipal Property Tax Stabilization Board which will establish procedures for determining the valuation base of a qualified Highlands municipality and determine the amounts needed to compensate a municipality for the decline in vacant land value resulting from implementation of the Highlands Water Protection and Planning Act. It will use information provided by the Division of Taxation, which, in turn, will receive information from county boards of taxation, based on reports they receive from municipal tax assessors. The Act establishes a fund to be used in providing state aid to qualified Highlands municipalities.

Phase-Out of Casino Complimentaries Tax
L. 2004, c.128, enacted August 30, 2004, and effective on that date, provides for the gradual phase-out of the tax on casino “complimentaries” until the tax expires on June 30, 2009. It also transfers from the Division of Taxation to the Casino Control Commission the responsibility for administering the casino complimentaries tax, the casino adjusted net income tax, the multi-casino slot machine tax, the casino parking fee, and the $3 casino hotel occupancy fee.

Casino Reinvestment Development Act Changes
L. 2004, c.129, enacted August 25, 2004, and effective on that date, extends the investment alternative tax obligation of casino licensees from 35 to 50 years, authorizes the Casino Reinvestment Development Authority to approve five additional “entertainment retail districts,” and allows for grants to the Authority for 20 years from sales tax revenue generated in entertainment districts.

Estates and Trusts Changes
L. 2004, c.132, enacted August 31, 2004, and effective on the 180th day following enactment, makes important changes in the way estates and trusts must be administered in this state. It clarifies the meaning of critical terms, clarifies when “writings intended as wills” will be allowed, and makes changes in the provisions governing intestate succession.

Health Enterprise Zones
L. 2004, c.139, was enacted September 2, 2004, and will become effective March 2, 2005, except that the gross income tax deduction provision will apply to entire tax years after enactment, i.e. beginning January 1, 2005. This Act creates “health enterprise zones” (HEZ) in communities which, based on their economic status and the extent of professional health services available, have been designated as “underserved areas.” It provides that qualified primary care physicians and dentists practicing in or within 5 miles of an HEZ will be allowed to deduct from gross income the portion of their net income allocable to qualified receipts of their practice in that geographic area. The Act also allows municipalities to exempt from real property tax structures housing a primary medical or dental care practice located in a HEZ. The amount of such exemption will be available as a rebate if the medical or dental care provider is a tenant, rather than owner, of the structure.

Miscellaneous Local Tax Changes
L. 2004, c.181, enacted December 22, 2004, and retroactive in application to September 21, 1999, repeals the December 31, 2004, expiration of certain municipalities’ authority to impose payroll taxes.

Changes in Historic Site Property Tax Exemption
L. 2004, c.183 , enacted December 22, 2004, and effective immediately, revised the criteria for designation as a “historic site” for purposes of property tax exemption.

Previous Legislation:

Last Updated: Tuesday, 03/03/20