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  • NJ A12
  • Adjusts certain State taxes to support strengthened investments in public and private assets in this State.*
Introduced
(6/27/2016)
In Committee
(7/29/2016)
Crossed Over
(10/7/2016)
Passed
(10/7/2016)
Signed
(10/14/2016)
Dead/Failed/Vetoed
2016-2017 Regular Session
This bill adjusts certain State taxes. The various changes in State taxes are described as follows: The bill reduces the New Jersey sales and use tax rate from 7% to 6.5% on January 1, 2017 and to 6% on January 1, 2018. The bill includes special transition provisions for taxing sales transactions which in one way or another stretch across the tax change date (e.g., contractor purchases, installment purchases, leases, and goods or services with delayed delivery or payment). The bill provides for increases in the petroleum products gross receipts tax rates, which, either by statutory or constitutional dedication, will finance funding for the State's transportation infrastructure. Currently, the petroleum products tax is imposed at the rate of 2¾ percent on gross receipts from the first sale of petroleum products in New Jersey. In the case of motor fuels, aviation fuels, and heating fuels (home heating fuels are exempt) this rate is converted to $0.04 per gallon. This bill increases the base rate on petroleum products, other than highway fuel and other than aviation fuel, to 7 percent of gross receipts, and increases the base rate on highway fuel to 12.5 percent of gross receipts. The 12.5 percent tax on gasoline (which excludes aviation gasoline), gasoline equivalents and liquefied petroleum gas is converted to a cents-per-gallon rate based on the retail price of gasoline before the imposition of State and federal tax. The 12.5 percent tax on diesel fuel, diesel fuel equivalents and kerosene (other than aviation grade kerosene), is converted to a cents-per-gallon rate based on the retail price of number 2 diesel before tax. Initially, the diesel and kerosene rate will be zero; on and after January 1, 2017 it will be 70 percent of the 12.5 percent rate, and on and after July 1, 2017 it will be taxed at the 12.5 percent rate. These cents-per-gallon rates can be adjusted quarterly, but cannot fall below the rates determined for the quarter beginning July 1, 2016. The bill provides a cap for the total tax on highway fuel, under the petroleum products gross receipts tax and the motor fuel tax. The State Treasurer and the Legislative Budget and Finance Officer calculate an amount based on actual sales data from FY2016 as if taxed at the new tax rates; the 2016 motor fuel tax collections of highway fuel, plus the four cents per gallon petroleum products tax now in effect, plus the 23 cents per gallon new imposition under the petroleum products tax. This is the highway fuel cap amount. Each 2017 through 2026 the Treasurer, using U.S. Energy Administration projections for gasoline price and consumption in New Jersey and other data, determines what tax rate should be imposed under the petroleum products tax on highway fuel so that the revenues from the motor fuels tax on highway fuel, the 4 cent per gallon petroleum tax and the percentage rate petroleum tax will result in the State receiving the highway fuel cap amount for the fiscal year, and the new rate takes effect on October 1. The bill also has a "true-up" provision: if the rate is too high and the State overcollects, then in the next year the rate must be adjusted down to account for the overcollection, and if the State undercollects then the rate is increased to account for the undercollection. The 7 percent tax on fuel oil is converted to a cents-per-gallon rate based on the pretax retail price of number 2 fuel oil. These rates can be adjusted quarterly, but cannot fall below the rates determined for the quarter beginning July 1, 2016. Initially, the highway fuels will be subject to an additional cents-per-gallon rate of four cents. On and after July 1, 2017 the additional rate on diesel fuel and kerosene will be raised to eight cents per gallon. Aviation fuel will be subject to a 4 cents per gallon tax, and taxation of common carriers in interstate and foreign commerce will be limited to the "burnout" portion, both of which are identical to practice under current law. The bill increases the New Jersey gross income tax pension and retirement income exclusions fivefold over four years. This is intended to reduce the capacity of the State's personal income tax to diminish the after-tax retirement income available to retired taxpayers in this State. Generally under current law, taxpayers with $100,000 or less of annual income, who are at least 62 years old, may claim a pension and retirement income exclusion of up to $20,000 for joint filers, $15,000 for individuals, and $10,000 for married but filing separately. This bill increases the personal income tax's pension and retirement income exclusion to $100,000 for joint filers, $75,000 for individuals, and $50,000 for married but filing separately. The bill phases in the five-fold exclusion increase over four years as follows: Filer Type Present 2017 2018 2019 2020 Joint $20,000 $40,000 $60,000 $80,000 $100,000 Individual $15,000 $30,000 $50,000 $60,000 $75,000 Separate $10,000 $20,000 $30,000 $40,000 $50,000 Currently, the pension and retirement income exclusions are not allowed to a taxpayer who has gross income of more than $100,000 for the taxable year. For taxable years beginning on or after January 1, 2021, the bill allows a taxpayer with income of more than $100,000 but not over $125,000 to exclude 50 percent of the amount of pension and retirement income otherwise allowed and a taxpayer with more than $125,000 but not more than $150,000 of gross income to exclude 25 percent of the amount otherwise allowed. The bill establishes a three-member review council, composed of the State Treasurer, the Legislative Budget and Finance Officer, and a third public member selected by both. The review council will report to the Governor and the Legislature by January 15, 2020, on the council's consensus estimate of the increase or decrease in State revenues caused by each section of this bill during the three prior fiscal years compared to the estimates at the time of enactment. The review council will monitor the actions of the Legislature on an ongoing basis for interference with the implementation of the provisions of the bill. If implementation is impeded, (by, for example, delaying a phase-in of an increased tax exclusion, freezing a scheduled rate reduction, or repealing one of the bill's provisions), the council will certify this interference to the Director of the Division of Taxation. This certification triggers the cessation of imposition of one of the components of the petroleum products gross receipts tax, and collection of that part of the tax ends.
2nd Reading in Assembly to Concur with Senate Amendments, 2nd Reading in the Senate, Bills and Joint Resolutions Signed by the Governor, Passed Assembly, Passed both Houses
Approved P.L.2016, c.57.  (on 10/14/2016)
 
 
Date Chamber Action Description
10/14/2016 A Approved P.L.2016, c.57.
10/7/2016 A Passed Assembly (Passed Both Houses) (45-27-0)
10/7/2016 A Motion Table Motion (Greenwald) (Voice)
10/7/2016 A Motion To Recommit AAP (Ciattarelli)
10/7/2016 A Received in the Assembly, 2nd Reading on Concurrence
10/7/2016 S Passed by the Senate (24-14)
10/7/2016 S Motion To Table (20-13) (Weinberg)
10/7/2016 S Motion To Sa (Beck)
10/7/2016 S Substituted for S2411 (3R)
10/5/2016 S Senate Amendment (22-10) (Sarlo)
10/5/2016 S Motion To Table (19-9) (Weinberg)
10/5/2016 S Motion To Sa (Beck)
7/29/2016 S Reported from Senate Committee with Amendments, 2nd Reading
7/29/2016 Senate Budget and Appropriations Hearing (11:00 7/29/2016 Committee Room 4, 1st Floor)
6/30/2016 S Received in the Senate, Referred to Senate Budget and Appropriations Committee
6/27/2016 A Passed by the Assembly (53-23-0)
6/27/2016 A Emergency Resolution (Prieto) (61-15-0)
6/27/2016 A Motion Add to calendar (Prieto) (56-19-0)
6/27/2016 A Introduced, 1st Reading without Reference, 2nd Reading
Date Motion Yea Nay Other
Detail 10/7/2016 Senate Floor: Substitute For S2411 (Voice Vote) 0 0 0
Detail 10/7/2016 Senate Floor: Third Reading - Final Passage 24 14 2
Detail 10/7/2016 Assembly Floor: Concur in Senate Amendments 45 27 8
Detail 10/7/2016 Assembly Floor: Table Motion (Voice Vote) 0 0 0
Detail 10/5/2016 Senate Floor: Second Reading (Voice Vote) 0 0 0
Detail 10/5/2016 Senate Floor: Amend 23 10 7
Detail 10/5/2016 Senate Floor: Table Motion 19 9 12
Detail 7/29/2016 Senate Budget and Appropriations Committee: Reported with Amendments 8 3 2
Detail 6/28/2016 Assembly Floor: Add to Calendar 56 19 5
Detail 6/28/2016 Assembly Floor: Third Reading - Final Passage 53 23 4
Detail 6/28/2016 Assembly Floor: Enact Emergency Clause 61 15 4