New Jersey Governor Phil Murphy delivered his FY2021 budget address on February 25 to a joint session of the Legislature. The budget proposes nearly $1 billion in new taxes, and one of the most significant involves an extension of the “millionaires tax.”
New Jersey's Gross Income Tax rate for income of $5 million or more is currently 10.75 percent, and the top rate for income between $1 million and $5 million is 8.97 percent. The proposed budget lowers the income threshold for the millionaire's tax from $5 million to $1 million.
The tax increase on those whose income falls in the $1 million to $5 million range is projected to generate approximately $500 million in additional tax revenue for New Jersey in FY2021. The proposal is expected to receive legislative approval.
As part of his budget address, Governor Murphy also talked about tax incentives and his commitment to new “incentive models.” It is no secret that the Governor considered the Grow NJ and ERG (Economic Redevelopment and Growth) programs failures. Based on his comments, it is likely that either or both of these programs could be eliminated in FY2021.
We will continue to monitor the progress of Governor Murphy's proposed budget and provide additional updates during the process. If you have any questions in the meantime, please do not hesitate to contact a member of Kreischer Miller's State and Local Tax Team.
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