In The Highest Taxed State, There’s Nowhere To Go But Down
New Jersey ranks high on many quality of life measures: top-tier education and health care, low crime and poverty, long life expectancy, and so on. But the Garden State is also notorious for taxation, ranking at or near the top in nearly every category of personal and business taxes.
Through diligent planning and effective advocacy, Goldburd McCone LLP helps individuals, businesses and nonprofits throughout New Jersey shrink their tax burdens and address conflicts with the IRS or the NJ Division of Taxation. From our office in Lakewood, our experienced tax lawyers provide effective representation for audits and controversies and proactive tax law strategies for compliance and mitigation.
The state of New Jersey receives a whopping 45% of its revenue from property taxes. The effective tax rate is 2.19% and property values are high, translating to $9,196 for the average NJ homeowner in 2020. Where does the money go? New Jersey has one of the highest educational costs per pupil: 60% goes to schools and the rest to counties (20%) and statewide infrastructure (20%).
Our lawyers can represent New Jersey homeowners or commercial property owners in challenging the accuracy or legality of local assessor valuations and corresponding tax assessments.
New Jersey has one of the highest rates for personal income tax. There are seven brackets with graduated rates, including a recently enacted “millionaire tax.” Those earning less than $20,000 pay no state income tax. The top bracket of 10.75% — formerly triggered at $5 million — now kicks in at $1 million in income.
Beware the residency trap. New Jersey’s oppressive taxes (and northern climate) encourage many “snowbirds” to homestead in Florida or other tax haven states for part of the year. However, the IRS and the New Jersey Department of Revenue will closely scrutinize residency claims to ensure you are not gaming the system to evade taxes. Our lawyers have experience defending taxpayers in residency audits, and advising clients on compliance before moving from New Jersey or New York to Florida.
The statewide sales tax of 6.625% is not the highest in the country, but it’s up there. Salem County gets a special exemption: the sales tax is halved to 3.3% so retailers can compete with neighboring Delaware which has zero sales tax.
It almost goes without saying that New Jersey would be one of the few states that still impose an inheritance tax. First-tier beneficiaries are exempt: spouses, children, grandchildren and parents of the deceased. Other classes of beneficiaries may pay a tax of up to 16% when inheriting: siblings, son-in-law/daughter-in-law, nieces and nephews, aunts and uncles, friends and non-relatives.
The Tax Foundation ranks New Jersey 50th out of 50 states for business tax climate. In addition to the cumulative taxation on individuals (income, property and sales taxes), New Jersey levies the highest corporate income tax in the country. The graduated rates start at 6.5% on the first $50,000 of business income, with a top rate of 11.5% for income of $1 million or more.
Can You Benefit From A Full-Service Tax Firm?
Goldburd McCone LLP is a recognized leader in tax law. Since 1983, our experienced tax attorneys have delivered sophisticated solutions and advocacy in all tax-related matters, from property tax relief and business tax planning to representation in income tax audits and criminal tax matters.