2018 and 2019 New Jersey Tax Law Changes

July 23, 2018 News

By: Laurie J. Vitullo, CPA, Tax Manager

July 13, 2018

 

Here is a list of tax law changes included in the fiscal year 2019 budget signed on July 1, 2018:

  • Increase in the income tax rate to 10.75 percent for taxpayers with income over  $5 million
  • Corporate business surcharge of 2.5% for the next two years and 1.5 % in years three and four, for corporations earning more than $1 million. Also an adoption of a combined reporting requirement
  • A 90 day tax amnesty program
  • An increase in the state property tax deduction cap from $10,000 to $15,000
  • More funding for the Homestead Property Tax Relief Program
  • Increase in the Earned Income Tax Credit
  • A new Child and Dependent Care Tax Credit
  • Sales- tax requirements for short term housing rentals (Airbnb)
  • New surcharge on Uber and Lyft rides
  • A new tax on e-cigarettes
  • More NJ transit funding
  • Modifications to school funding formula
  • Funding for free community colleges for lower income residents

In addition to the changes listed in the budget, bills for Equal Pay and Individual Health Insurance were signed into law. The Diane B. Allen Equal Pay Act became effective on July 1, 2018. This law protects against discirmation in wages and benefits for employees performing substantially similar work unless justified by legitimate business necessity. The employer may pay a different rate if the difference is made pursuant to seniority, merit or education. This law listed those protected by class and is not limited to gender. The list of classes are: race, creed, color, nationality, national origin, ancestry, age, marital status, civil union, domestic partnership, affectional or sexual orientation, genetic information, pregnancy, gender identity or expression, disability or atypical hereditary cellular or blood trait of any individual, and liability for service to the armed forces. The law shifted the burden of proof to the employer. The employee can look beyond their current employer and location to compare the job and rates. They can use employers outside of NJ to compare wages and jobs. The law prohibits employers from reducing another’s pay to remedy the problem. While Federal laws limits back pay remediation to 2 years, NJ allows up to 6 years of recovery. This new law allows and protects employees who discuss, seek or obtain information regarding their pay and the pay of others. Employers of every size with employees in New Jersey are subject to the bill, so employers should carefully review their current job descriptions, employee handbooks and policies to determine which employees perform substantially similar work in order to ensure that they are compensated at  the same rate. If there are different rates, they should substantiate that the difference is not based upon any of the classes listed in the requirement or they should remedy those who are discriminated against. Employers might consider revising handbooks and policies.

Effective January 1, 2019, NJ will require all New Jersey residents to have health insurance coverage or be subject to a penalty. This mandate mirrors the former Federal requirement. The penalty will be an annual 2.5% of a household’s income or a per person charge, whichever is higher. The maximum penalty based upon household income will be the average yearly premium of a bronze plan. If based upon a per person charge the maximum penalty will be $2,085.There will be hardship exceptions determined by the state treasurer. The money collected will fund a reinsurance program. The reinsurance is a program to help insurers cover the cost of the most expensive Obamacare patients and reduce average premium increases. In the next seven months, we may see certain adjustments to this law and appeals to repeal the act.