An agreement has been reached by Governor Phil Murphy and Legislative leaders on an income tax rate hike (from 8.97% to 10.75%) on earnings in excess of $1 million. The higher rate currently applies to income over $5 million. Announcing the agreement, Governor Murphy was joined by Senate President Steve Sweeney, Assembly Speaker Craig Coughlin, and the Chairs of the Legislature’s budget-writing Committees, Senator Paul Sarlo, and Assemblywoman Eliana Pintor Marin.
The Governor also announced a new $500 annual rebate for families with at least one child as part of the deal. Couples with annual income of less than $150,000 and single parents earning under $75,000 a year would qualify for the rebates to be distributed beginning in August 2021.
The tax rate increase is projected to generate $390 million in the State’s upcoming 2021 Fiscal Year. The rebates will cost an estimated $340 million, each year. The millionaires’ tax was one of the building blocks in the Governor’s FY ’21 budget proposal, currently being considered by state lawmakers. That budget also includes $1.2 billion in spending cuts and $4 billion in borrowing.
We continue to monitor State budget deliberations and advocate for sufficient funding for important municipal property tax relief programs.
Contact: Jon Moran, Senior Legislative Analyst, jmoran@njlm.org, 609-695-3481 x121.