Accountants in New Jersey say the new federal tax law has had a mixed impact in the Garden State.
One of the main issues has been a $10,000 cap on state and local tax deductions, known as SALT, a limit that was expected to hit high-tax states like New Jersey the hardest.
Yet under the new law signed by President Donald Trump, tax rates have also dropped. And that’s evened out the tab for many filers.
“For some of the people, the tax rates are actually lower, so the lower tax rates have negated some of the offset,” said Jonathan Donenfeld, a certified public accountant in Jersey City. “Some people have had serious increases.”
Alan Sobel, a certified public accountant in Livingston, said many filers are not paying as much in federal taxes as they expected, but the very wealthy with higher property tax bills have wound up forking over more to the federal government.
“They’re looking at [this law] and saying, ‘I thought this was supposed to benefit me,’ and it doesn’t,” he said.
New Jersey has long sent more tax money to the federal government than it has gotten back in revenue, and Sobel said the new law exacerbates the state’s “donor” status.
“One of the things that offset what we sent down to Washington was the ability to deduct what we pay here locally,” Sobel said. “With the elimination of what we pay locally, the gap is even greater.”
One of the most vocal critics of the new SALT cap has been Gov. Phil Murphy, who said the limit unfairly affects residents of the Garden State and urged lawmakers to reconsider.