Proposed Income Tax Increase & CBT Surcharges Vetoed
Governor Chris Christie recently signed a $33.8 billion FY 2016 budget, which took effect July 1, 2015. Before signing the budget, Governor Christie vetoed several items, including an income tax increase and corporation business tax (CBT) surcharge. He also used his line-item veto powers to make corresponding cuts in State spending. The Governor also recommended increasing the Earned Income Tax Credit from 20% to 30%.
Prior to the budget hitting the Governor’s desk, the New Jersey Legislature passed a $35.3 billion budget that would have increased the top income tax rate to 10.75% on income over $1 million and passed a one-year 15% increase in the CBT. Together, the two measures would have increased taxes by more than $1 billion.
The New Jersey Business & Industry Association (NJBIA) noted that, while the income tax was billed as a tax increase on the rich, many small businesses would have been affected. Partnerships, LLCs, S Corporations and others pay their business taxes through their personal income tax returns, and many would have exceeded the $1 million threshold with their business income.