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New Jersey may slash sales tax, raise gas tax


 Gas could soon cost more in New Jersey. But don't worry, you still won't be able to pump it yourself.

Next to Alaska, New Jersey has the lowest gas tax in the nation. It hasn’t budged from 14.5 cents per gallon since 1988. This honor has awarded The Garden State some of the worst transportation infrastructure around. Roads are potted, bridges crumbling. There is no money for repairs.

Although intensely anti-tax increase, Governor Chris Christie has at last agreed to compromise. Standing beside Senate President Stephen Sweeney and Assembly Speaker Vincent Prieto on Friday, the governor announced “a bipartisan agreement for broad-based tax cuts and funding for the Transportation Trust Fund (TFF).” He said he’s authorizing this tax increase “because of the importance of the Transportation Trust Fund, the tax fairness that we’ve accomplished together and the compromise we’ve reached, and because we need to responsibly finance this type of activity.” The news broke the day after a commuter train crashed into the Hoboken terminal, killing one and injuring more than 100 people.

According to the governor’s website, the plan seeks to:

  • Slash the sales tax rate from 7% to 6.875% on January 1, 2017, and then drop it to 6.625% on January 1, 2018
  • Increase gas tax by 23 cents per gallon, to 37.5 cents per gallon
  • Increase the earned income tax credit for the working poor
  • Increase the gross income tax exclusion on pension and retirement income
  • Eliminate the estate tax over the next 15 months
  • Provide a personal state income tax exemption for honorably discharged New Jersey veterans

It’s not a done deal. The Legislature will convene on Wednesday to vote on the tax proposals.

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Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.