New Jersey budget expands Millionaire’s Tax extends CBT surcharge

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October 2020

Overview

The COVID-19 pandemic has strained and depleted the finances of state and local economies around the country. New Jersey is no exception. Citing deep revenue shortfalls, largely attributable to the pandemic, Governor Phil Murphy (D) signed the Fiscal Year 2021 state budget into law September 29. The budget legislation adopts several changes to the personal and corporate income tax laws designed to help raise revenue.

The takeaway

By expanding the Millionaires Tax and extending the CBT surcharge, New Jersey estimates it will generate approximately $750 million of additional tax revenue to help address it’s fiscal needs. 

As another potential revenue source a financial transactions tax was introduced in the legislature in July. See PwC's Insight here.  If enacted, the financial transactions test would have imposed a tax on persons or entities that process 10,000 or more financial transactions through electronic infrastructure located in New Jersey during the year. The tax was set to be $0.0025 per financial transaction processed in the state. For purposes of this tax, the financial transaction tax would be triggered any time there was a transaction involving the purchase or sale of a financial security.  While the financial transactions tax was not included in the Governor’s FY 21 Budget, it remains to be seen whether it may be included in future legislation.  Accordingly, taxpayers should continue to monitor state developments.

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Peter Michalowski

State and Local Tax Leader, PwC US

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