The New Jersey Division of Taxation has issued guidance pertaining to the state’s treatment of the federal Tax Cuts and Jobs Act’s one-time repatriation of certain foreign earnings and profits. Under the federal Act, U.S. shareholders of controlled foreign corporations or corporations owning 10 percent or more of another foreign corporation are deemed to receive a repatriated dividend of accumulated post-1986 deferred foreign income in the last tax year beginning before January 1, 2018.
On March 13th, New Jersey Governor Murphy delivered his administration’s first budget address. In the address and subsequent summary of the budget proposals, the Governor called for a number of different personal income tax, corporate tax and sales tax changes. The corporate tax changes are being labeled as a “modernization” of business taxes. Some of the key tax changes include the following:
- Increasing the Gross Income Tax (“GIT”) deduction for property taxes paid from $10,000 to $15,000.
- Closing the carried interest loophole in New Jersey tax. At this point, it is not clear exactly what form this proposal will take but there is currently pending legislation which would impose a special surtax on such income and eliminate the exclusion from GIT for nonresidents performing investment/intangible management activities in New Jersey.