If you’re a high earner, New Jersey might not be the place for you much longer. In a recent move, the state has opted to increase the state of New Jersey income tax for its wealthiest residents.
New Jersey income tax is going up for millionaires. The so-called “millionaires tax” is set to go into effect. Retroactive to January 1st of this year, the measure imposes a 10.75% tax on earnings over $5 million.
New Jersey was already one of the highest tax jurisdictions. Back in 2004, the state enacted one of the first “millionaire taxes” hitting folks with income over $500,000 with a new top tax rate. -Forbes
As if that wasn’t enough, New Jersey has also moved to close a loophole which enabled businesses to sidestep taxes. By running “New Jersey” businesses through Florida, some businesses were able to skirt the New Jersey taxes. Now, that loophole is closed.
The move pushes the New Jersey income tax into the third most expensive place for high income residents. California (13.3% on income over $1 million) and Hawaii (11% on income over $200,000) round out the top three.
New Jersey is not the first state to impose higher taxes on big earners. Just the latest. Of course, moving is always an option. High income earners tend to leave high tax states when it becomes advantageous.
Proponents of so-called “millionaire’s taxes” argue that higher income residents who earn more should pay more. The additional revenue, it is argue, can go towards funding education or infrastructure.
Detractors argue that high-income earners will simply leave. This may seem like a drastic move. However, high-income residents stand to pay considerably more in terms of real dollars (not just percentages). When several hundred thousand dollars are on the line, it becomes advantageous to take a drastic step. Millionaire tax detractors further argue that those residents have the means to make such a move.
Ready To Leave New Jersey?
If the updated New Jersey income tax will affect you, it may be time to consider moving elsewhere. For that, there’s City vs City. City vs City is a one-of-a-kind mobile app that calculates cost of living expenses.
Using real, local data curated at the zip code level, City vs City can show you how your cost of living will change if you move to a different city. Simply input your data, set the zip codes of your choice, and let the app go to work.
As a result, you’ll see a side by side comparison of costs. You’ll see how your expenses will change if you were to move.
If you’re considering moving, don’t make a move without downloading City vs City first.