04 Jan Tax savings for NJ seniors

Q. I‘m 67 and retired, and I want to understand the change to the tax-free income for seniors that was part of the gas tax bill. Help!
— Not getting it

A. The gas tax bill was more than just the increase in what you pay at the pump.

Like we see with most legislation, other provisions get bundled in with the main event. And this one had a whole bunch of additional provisions.

The changes will mean a lot to the pocketbooks of New Jerseyans.

The bill included the elimination of the estate tax by 2018, a newly created tax deduction for veterans, a small cut to the sales tax rate (3/8 of 1 percent), an increased earned income credit and an increase of the retirement income exclusion.

Your question is about that last one, the retirement income exclusion.

Married couples — who are both either at least 62 years of age or disabled and who file jointly — could exclude the first $20,000 in retirement income on their New Jersey returns, said Cynthia Fusillo, a certified public accountant with Lassus Wherley in New Providence.

For single, qualifying widow/widower and heads of household filers, the exclusion was up to $15,000, Fusillo said. Single filers could exclude up to $10,000.

“The new law increases this exclusion up to $100,000, which will be phased in over a four-year period for married joint filers, $50,000 for married separate filers, and $75,000 for everyone else,” Fusillo said. “This is a positive change that will affect many taxpayers and, coupled with the elimination of the estate tax in 2018, it is hoped to keep folks in state longer.”

New Jersey has always been one of the most expensive places for retirement, and with the estate tax, the state was one of the most expensive places to die. Seems times are changing.

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This post was first published in January 2017.