NJ's New Millionaire Tax

Newsletter
July 22, 2004

Welcome to the first installment of my email newsletter. This and future issues will briefly address areas of estate planning, administration, taxation, business law and similar topics.  I hope you find it informative.

On June 28, 2004, Governor McGreevey signed into law an increase in individual income tax rates creating a new top tax rate of 8.97% on income in excess of $500,000.  New Jersey’s individual income tax brackets are now:

In 2000, the top New Jersey individual income tax rate was 6.37% on income of $150,000 and the top federal income tax rate was 39.6% on income in excess of $288,350, a combined rate of 45.97% assuming the deduction of the New Jersey tax from federally taxable income is phased out, and 43.45% assuming the New Jersey is fully deductible.

In 2004, the top New Jersey individual income tax rate is now 8.97% on income in excess of $500,000 and the top federal income tax rate is 35.0% on income in excess of $319,100, a combined rate of 43.97% assuming the deduction of the New Jersey tax from federally taxable income is phased out, and 40.83% assuming the New Jersey is fully deductible.

In 2000, a married couple with $1,000,000 in income would pay approximately $368,668 in federal income taxes and $59,658 in New Jersey income taxes, for a total of $428,326 in income taxes.

In 2004, a married couple with $1,000,000 in income would pay approximately $324,623 in federal income taxes and $72,657 in New Jersey income taxes, for a total of $397,280 in income taxes.  Even with the new “millionaire’s tax” these millionaires are paying $31,046 less in taxes than they were 4 years ago.

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