NJ Millionaires' Tax

On September 29, 2020, Governor Phil Murphy signed a bill which would increase New Jersey State Income Tax from salaries, wages and other remuneration in excess of $1 million.

BACKGROUND

On September 29, 2020, Governor Phil Murphy signed a bill that increases New Jersey State Income Taxes for those making more than $1 million from salaries, wages and other renumeration. 

NEXT STEPS

The legislation will be applied as follows: 

For the remainder of 2020:

For any wages in excess of $1 million earned since September 29, 2020 (but not in excess of $5 million), New Jersey State Income Tax calculations will be increased to 21.3% on all eligible wages. This higher withholding rate allows taxpayers affected by the rate increase to "catch up" on their withholdings for the year, since the new tax rate is retroactive to January 1, 2020.

For the 2021 calendar year and moving forward:

For any wages in excess of $1 million (year-to-date) earned, New Jersey State Income Tax calculations will be increased to 10.75% on all eligible wages. 

 

FREQUENTLY ASKED QUESTIONS

If I have earned in excess of $1 million prior to September 29, are my tax calculations increased for 2020?

Not necessarily. For the 2020 calendar year, the 21.3% tax rate applies to any employee who has earned more than $1 million (but not in excess of $5 million) since September 29, 2020. Starting in 2021, any wages in excess of $1 million will be taxed at a 10.75% rate for New Jersey State Income Tax.

 

Is any action required by me or my employees?

No. These updates will take place automatically.

 

When will these increases take place?

These increases will take place immediately for any employee who has earned more than $1 million (but not in excess of $5 million) since September 29, 2020. The 10.75% tax rate for any wages in excess of $1 million (year-to-date) earned will start on January 1, 2021.