Gas tax in NJ, to increase by 23¢ per gallon
On October 14, 2016 Governor Christie signed legislation which increases the tax on gasoline by twenty three cents (23¢) per gallon of gas beginning on November 1, 2016. The legislation also phases in an elimination of the New Jersey Estate Tax increasing the threshold from the current $675,000 to $2,000,000 effective January 1, 2017 and then eliminating that tax effective on January 1, 2018. The legislation also reduces the sales tax over a two year period by a total of .375%. The legislation also increases the retirement income exclusion from its current level of $20,000 to $100,000 in stages over the period from 2017 through 2020.
The gasoline tax rate could increase or decrease in the future (after the November increase) depending on the consumption of gas in New Jersey. This is because the legislation sets a target for funds raised and puts a cap on the amount to be raised. If gas consumption decreases, the tax rate could increase since a specific dollar amount is to be raised. Conversely, if gas consumption increases, the tax rate will go down due to the cap.
Since only a portion of the gas tax is currently dedicated to the Transportation Trust Fund (to fund roads and bridges) there is a ballot measure on the November 8th ballot to make a change to the New Jersey State Constitution to dedicate the entire amount of the gas tax to the Fund.
While the Estate Tax is being phased out, the inheritance tax (imposed on gifts to someone other than parents, spouses, children and grandchildren) is not changed. If the Estate Tax repeal remains in place it could vary estate planning for some individuals.
Finally, there is also a new tax deduction for veterans and an increase on the Earned Income Tax Credit for the working poor.
If you have questions about how this tax may affect your business or your estate, please contact Joseph LaCosta at 732.797.1600 or email LaCosta@cldds.com.