Reinstatement of Expired Urban Enterprise Zones
P.L. 2018, Chapter 19 – This law, signed on May 31, 2018, became effective immediately. It reinstates expired Urban Enterprise Zones (UEZ) until December 31, 2023, and extends the expiration deadline on all UEZs scheduled to expire to December 31, 2023.
P.L. 2018, Chapter 31 – This law, signed on May 31, 2018, will become effective January 1, 2019. It establishes the New Jersey Health Insurance Market Preservation Act which creates a State Shared Responsibility Tax to encourage residents to sign up for health insurance. The Shared Responsibility Tax takes effect in the 2019 tax year. The Affordable Care Act created a federal tax that will not be levied after the 2018 tax year. The State tax is designed to prevent erosion of health insurance markets once the federal tax expires.
P.L. 2018, Chapter 45 – This law took effect immediately and applies to tax years beginning on and after January 1, 2018. It effectively:
Below is a brief description of each section of the law.
Earned Income Tax Credit:
Qualified taxpayers were eligible for a New Jersey Earned Income Tax Credit equal to 35% of their federal Earned Income Credit. This law increased the percentage to 37% for the taxable year beginning on or after January 1, 2018, but before January 1, 2019. In taxable years beginning on or after January 1, 2019, but before January 1, 2020, the percentage will increase to 39%. The credit increases to 40% for taxable years beginning on or after January 1, 2020.
Child and Dependent Care Expenses:
Eligible resident taxpayers with New Jersey taxable income of $60,000 or less who receive the federal Child and Dependent Care Credit will be granted a Gross Income Tax credit. The credit is nonrefundable, meaning it will offset the tax due but cannot reduce the tax below $0.
The New Jersey credit is a percentage of the federal credit that the taxpayer receives for the taxable year and is based on their New Jersey taxable income:
|NJ taxable income is:||Amount of NJ Credit is:|
|Not over $20,000||50% of federal credit|
|Over $20,000 but not over $30,000||40% of federal credit|
|Over $30,000 but not over $40,000||30% of federal credit|
|Over $40,000 but not over $50,000||20% of federal credit|
|Over $50,000 but not over $60,000||10% of federal credit|
Income Tax Rate Increase:
As of January 1, 2018, individual income of more than $5 million is taxed at 10.75%, regardless of the taxpayer’s filing status. Beginning as soon as possible, but no later than September 1, 2018, employers must withhold Gross Income Tax at the rate of 15.6% from salaries, wages, and other remuneration paid for services rendered in excess of $5 million during the taxable year. This higher withholding rate allows taxpayers affected by the rate increase to “catch up” on their withholdings for the year since the new tax rate is retroactive to January 1.
The Division of Taxation won’t impose interest or penalties for insufficient payment of estimated tax and/or withholdings that may otherwise be due before September 1, 2018, if the insufficiency is a result of the new tax rate.
Carried Interest Surtax:
In addition to the above, the law also provides for the taxation of certain investment management services. The provisions of this portion of the law will take effect after the states of Connecticut, New York, and Massachusetts enact related legislation.
P.L. 2018, Chapter 46 – This law requires the Director of the Division of Taxation to establish a 90-day State tax amnesty period that ends no later than January 15, 2019. It was signed into law on July 1, 2018, and became effective immediately.
During the State tax amnesty period, taxpayers can file and pay any tax liability that was due on or after February 1, 2009, but before September 1, 2017. Amnesty participants can pay the tax as well as half of the interest due without late payment or late filing penalties, and won’t be charged a cost of collection fee, delinquency penalty, or recovery fee. Any taxpayer who makes full payment of the tax and half the interest due as of November 1, 2018, will not be responsible for the remaining half of the assessed interest.
All taxpayers with State tax return delinquencies and/or deficiencies are eligible to participate with the exception of those that are under criminal investigation or have been charged with any State tax matter.
P.L. 2018, Chapter 47 – This law was effective immediately, with the exception of Section 4, which takes effect on October 1, 2018. A surcharge of 50 cents will be imposed on a transportation network company rider for every pre-arranged ride that begins and ends in New Jersey. If the ride is a shared ride, then the surcharge for each rider will be 25 cents.
P.L. 2018, Chapter 50 – This law imposes a 10 cents per fluid milliliter tax related to sales of liquid nicotine. It was signed into law on July 1, 2018, and will become effective on September 29, 2018.
P.L. 2018, Chapter 52 – This law is effective immediately, but the assessment will not take effect until August 1, 2018. The Meadowlands Regional Hotel-Use Assessment will be applied on rent for the occupancy of every room in every hotel located outside of the Meadowlands district, but within a constituent municipality, including any hotels located on land owned by the State. Constituent municipalities include: Carlstadt, East Rutherford, Little Ferry, Lyndhurst, Moonachie, North Arlington, Ridgefield, Rutherford, South Hackensack, and Teterboro in Bergen County; and Jersey City, Kearny, North Bergen, and Secaucus in Hudson County.
P.L. 2018, Chapter 56 – This law, effective immediately, provides Corporation Business Tax and Gross Income Tax credits for certain expenses incurred during production of certain films and digital media content.