NJBIZ- The Senate Budget and Appropriations Committee will consider bills Monday that will look to phase out New Jersey's estate tax and offer more exclusions for taxes on retirement income.
A bipartisan bill co-sponsored by state Sen. Paul Sarlo (D-Wood-Ridge) and state Sen. Steven Oroho (R-Sparta) will look to gradually eliminate the estate tax, which currently applies to inheritances valued at $675,000 or more, over a five-year period.
Under the legislation, the exclusion rate would begin on Jan. 1, 2017, and would be increased to $1 million. The rate would then be increased yearly, reaching a projected mark of $5 million by 2020, until the tax is eliminated altogether.
Sarlo called it a “matter of financial fairness and economic reality in New Jersey.”
The retirement income measure, also co-sponsored by Sarlo and Oroho, would look to increase the threshold for retirement income exemptions for married couples, from $20,000 currently to $100,000 over three years. Exclusion rates would also be increased to $50,000 for married couples filing separately and $75,000 for single taxpayers.
“Too many people in New Jersey face retirement with reduced and fixed incomes,” said Sarlo. “These are targeted tax cuts where they are needed most. The increased exclusion will provide direct savings to retirees and the phase-out of the estate tax will help middle class families with relatively modest assets such as houses that are passed down from parents. These bills will help more New Jerseyans have greater financial security in their retirement.”
The bills are set to be considered at 1 p.m. Monday.
“On a bipartisan basis, we have been working to bring needed financial capital back to New Jersey to help improve our competitive economic position,” added Oroho. “By instituting these latest tax reforms, we will enable more New Jerseyans and businesses to remain in New Jersey, as well as attract new ones, which enhances our revenue stream with an added benefit of keeping families together.”
Though a phase-out of the estate tax has long been considered in connection with a proposed increase in the state’s gas tax to help replenish the depleted Transportation Trust Fund, no mention of a trust fund fix was mentioned.