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.

Continue Reading Governor Murphy Calls for Tax Reform

When it comes to New Jersey tax credits and incentives, many are familiar with the Grow New Jersey, Economic Redevelopment and Growth grant and Angel Investor Tax Credit programs.  However, an area that is often over-looked is that of sales tax exemptions—specifically for manufacturing, processing, telecom and research and development activities.  And these benefits can be substantial and taken advantage of while receiving other discretionary tax incentives offered by the New Jersey Economic Development Authority.

In general, sales tax is imposed on sales of tangible personal property and certain specified services that are not purchased for resale.  If sales tax is not collected on an otherwise taxable sale because the seller is not based in New Jersey and there is no available exemption from tax, the purchaser must report and pay use tax to the state, which is equivalent to the state sales tax.  The current sales/use tax rate in New Jersey is 6.625 percent.

Continue Reading Want to Save an Extra 6.625 Percent on Equipment Purchases and Replacement Parts?

Businesses that purchase or sell software, cloud computing resources or digital information services face a host of challenges when it comes to sales/use tax compliance.  The potential for unforeseen tax liability will only increase over time as software products and services become even more intricate and prevalent in the business world.

Vendors and providers of consumer products and services know the basic rules for sales tax but in the case of software and related services, the rules can be trickier.

Continue Reading A Taste of SALT for Software and Data Providers