Welcome to the first installment of my email newsletter. This and future issues will briefly address areas of estate planning, administration, taxation, business law and similar topics.  I hope you find it informative.

On June 28, 2004, Governor McGreevey signed into law an increase in individual income tax rates creating a new top tax rate of 8.97% on income in excess of $500,000.  New Jersey’s individual income tax brackets are now:

In 2000, the top New Jersey individual income tax rate was 6.37% on income of $150,000 and the top federal income tax rate was 39.6% on income in excess of $288,350, a combined rate of 45.97% assuming the deduction of the New Jersey tax from federally taxable income is phased out, and 43.45% assuming the New Jersey is fully deductible.

In 2004, the top New Jersey individual income tax rate is now 8.97% on income in excess of $500,000 and the top federal income tax rate is 35.0% on income in excess of $319,100, a combined rate of 43.97% assuming the deduction of the New Jersey tax from federally taxable income is phased out, and 40.83% assuming the New Jersey is fully deductible.

In 2000, a married couple with $1,000,000 in income would pay approximately $368,668 in federal income taxes and $59,658 in New Jersey income taxes, for a total of $428,326 in income taxes.

In 2004, a married couple with $1,000,000 in income would pay approximately $324,623 in federal income taxes and $72,657 in New Jersey income taxes, for a total of $397,280 in income taxes.  Even with the new “millionaire’s tax” these millionaires are paying $31,046 less in taxes than they were 4 years ago.