Recently effective legislation in New Jersey adjusts the amount of retirement income excluded from the state's income tax, doubling that amount to $40,000. An increase to $100,000 is planned by 2020. Newsworks’ recent article, “New Jersey deploys tax changes for elderly and veterans in 2017,” reports that this will make a difference for many people.
Many of the retirees in the state are living on Social Security, which the state of New Jersey doesn’t tax. They also have pensions or IRA distributions. This means that many New Jersey retirees will no longer pay state income tax.
The new legislation provides that the exemption from the state's estate tax will increase to $2 million and that it will be totally eliminated in 2018.
The state’s 7% sales tax rate has dropped to 6.875%.
It’s thought that most folks probably won't notice that adding the phase-out of the estate tax and the retirement income exclusion change are a big deal. However, it may mean that individuals won’t have an incentive to leave the state of New Jersey when they retire.
Some say the estate tax phase-out won't be the critical factor on whether people leave the state. New Jersey still has some of the highest real estate taxes and income taxes, so people may still be skeptical of the real impact of these changes on their cost of living in New Jersey.
In addition, the new legislation provides an income tax break for military veterans and increases a tax credit for low-income workers.
Reference: Newsworks (January 2, 2017) “New Jersey deploys tax changes for elderly and veterans in 2017”