Decrease in NJ Sales and Use Tax beginning January 1, 2017
After much discussion and political deal-making, on October 14, 2016 Governor Chris Christie officially signed legislation implementing a new tax package to raise money for the Transportation Trust Fund to help repair New Jersey’s roads, bridges and various other infrastructure. Although the increase in gas tax is what caught the attention of most people, this was not the only change potentially affecting you and your wallet.
The new law includes:
- An increase in the tax on gasoline in the amount of 23-cents per gallon;
- A complete phase-out of New Jersey’s Estate Tax (not the New Jersey Inheritance Tax);
- Increasing pension and retirement income tax exclusions; and
- A slight reduction to the sales tax.
New Jersey Sales Tax
On January 1, 2017, the sales tax will decrease from 7 percent to 6.875 percent. The following year, the sales tax will decrease another quarter of a point to 6.625 percent.
What Should You Do Now?
Business owners should begin to make arrangement to update software and cash registers to comply with the new sales tax rates beginning January 1, 2017. Individuals may consider postponing major purchases until 2017, but the impact should be minimal with the drop in sales tax of only 0.13875 percent. The sales tax savings on a $50,000 vehicle would only be $69.38 – enough for full tank of gas with the new higher gas tax.