10 July 2018 New Jersey law raises 2018 income tax and withholding rates On July 1, 2018, New Jersey Governor signed into law legislation that, effective January 1, 2018, increases the income tax rate on high wage earners, raises the Earned Income Tax Credit and makes other changes in response to the federal Tax Cuts and Jobs Act. (A3088/P.L. 2018, c45.) Increase in personal income tax rates effective January 1, 2018 Effective January 1, 2018, the New Jersey individual tax rate on income over $5 million is subject to a higher tax rate. (See the updated 2018 tax tables on the following pages). As soon as practical, but not later than September 1, 2018, employers are required to withhold at the rate of 15.6% on wages in excess of $5,000,000. Updated 2018 withholding tables and other guidance pursuant to the law change will be issued by the New Jersey Division of Taxation as the law provides. Earned Income tax Credit (EITC) For 2017, the New Jersey ETIC payment was equal to 35% of the federal EITC. For example, if the federal EITC was $3,000, the amount of the New Jersey EITC was $1,050. Part-year residents who qualified for the New Jersey EITC were required to adjust the amount of the EITC based on the number of months they were New Jersey residents. Effective for tax year 2018, the law increased the New Jersey EITC to 35% of the federal EITC over the next three years as follows: — 35% for taxable years beginning on or after January 1, 2016, but before January 1, 2018 — 37% for the taxable years beginning on or after January 1, 2018, but before January 1, 2019 — 39% for the taxable years beginning on or after January 1, 2019, but before January 1, 2020 — 40% for taxable years beginning on or after January 1, 2020. Employers are required to provide notice to their employees about the New Jersey EITC each year. The law also makes other changes in response to the Tax Cuts and Jobs Act including an increase in the maximum deduction for paid homestead property taxes from $10,000 to $15,000 and the establishment of a new nonrefundable child and dependent care tax credit. New Jersey personal income tax rates effective January 1, 2018 (withholding tables pending) Married individuals filing a joint return, individuals filing as head of household or surviving spouse If income is … . | But not over … | The tax is | Not over $20,000.00 | | 1.400% of taxable income | Over $20,000.00 | but not over $50,000.00 | $280.00 plus 1.750% of the excess over $20,000.00 | Over $50,000.00 | but not over $70,000.00 | $805.00 plus 2.450% of the excess over $50,000.00 | Over $70,000.00 | but not over $80,000.00 | $1,295.50 plus 3.500% of the excess over $70,000.00 | Over $80,000.00 | but not over $150,000.00 | $1,645.00 plus 5.525% of the excess over $80,000 | Over $150,000.00 | but not over $500,000.00 | $5,512.50 plus 6.370% of the excess over $150,000.00 | Over $500,000.00 | but not over $5,000,000.00 | $27,807.50 plus 8.970% of the excess over $500,000.00 | Over $5,000,000.00 | | $431,457.50 plus 10.75% of the excess over $5,000,000.00 |
Married individuals filing separately, unmarried individuals (other than those filing as head of household) or surviving spouse If income is … . | But not over … | The tax is | Not over $20,000.00 | | 1.400% of taxable income | Over $20,000.00 | but not over $35,000.00 | $280.00 plus 1.750% of the excess over $20,000.00 | Over $35,000.00 | but not over $40,000.00 | $542.50 plus 3.500% of the excess over $35,000.00 | Over $40,000.00 | but not over $75,000.00 | $717.50 plus 5.525% of the excess over $40,000.00 | Over $75,000.00 | but not over $500,000.00 | $2,651.25 plus 6.370% of the excess over $75,000.00 | Over $500,000.00 | but not over $5,000,000.00 | $29,723.75 plus 8.970% of the excess over $500,000.00 | Over $5,000,000.00 | | $433,373.75 plus 10.75% of the excess over $5,000,000.00 |
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ATTACHMENT Document ID: 2018-1373 |
