New Jersey Society of CPAs Reminds Taxpayers to Stay Abreast of New Tax Laws This Tax Filing Season
Let’s Talk Tax Reform
As the tax filing season begins, Alloy Silverstein and the New Jersey Society of Certified Public Accountants (NJCPA) reminds taxpayers that various state and federal tax changes are in effect for the 2018 tax year for both individuals and businesses. CPAs can provide guidance on both federal and state law changes.
The following are some notable changes:
New Jersey Tax Changes
Gross income tax increase. The gross income tax rate has been increased from 8.97 percent to 10.75 percent for those taxpayers whose income is over $5 million.
Earned Income Tax Credit (EITC). Qualified taxpayers are eligible for a New Jersey EITC equal to 37 percent of their federal earned income credit.
Property tax deduction. The New Jersey property tax deduction for principal residences has increased from a maximum of $10,000 to $15,000 for 2018.
Child and dependent care credit. A new tax credit is available for eligible resident taxpayers who are allowed a federal credit for expenses they incur for the care of one or more qualifying individuals.
Corporation business tax (CBT) changes. A number of changes have been made to the CBT, including a 2.5 percent surtax for many business taxpayers with allocated net income exceeding $1 million.
Tax brackets. Most individual tax income tax brackets have been lowered, including the top marginal rate from 39.6 percent to 37 percent.
Standard deduction and exemptions. The standard deduction has been almost doubled, and the personal exemption has been eliminated.
Itemized deductions. A number of deductions have been eliminated or limited, most noteworthy being the $10,000 cap on all state and local taxes.
Alternative Minimum Tax (AMT). The exemptions and phaseouts have been increased so that the AMT will be less likely to hit at lower income levels.
Corporate tax changes. The corporate tax rate was reduced from a maximum progressive rate of 38 percent to a flat rate of 21 percent. Business taxpayers other than corporations may be entitled to a deduction equal to 20 percent of qualified business income (QBI).
Learn more about federal income tax changes on the IRS website.
“CPAs are always in demand, but at this time of year CPAs are particularly needed to clarify new tax laws, what taxpayers can and cannot deduct or to find out how a regulation applies either directly or indirectly to them,” said Ralph Albert Thomas, CPA (DC), CGMA, CEO and executive director at NJCPA.
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The New Jersey Society of Certified Public Accountants, with more than 14,500 members, represents the interests of the accounting profession and advances the financial well-being of the people of New Jersey. The NJCPA plays a leadership role in supporting the profession by providing members with educational resources, access to shared knowledge and a continuing effort to create and expand professional opportunities.
