New Jersey residents earning more than $1 million a year will face higher income taxes, and about 800,000 lower- and middle-income families will get a $500 tax rebate, under a deal Gov. Phil Murphy and legislative leaders announced Thursday.
Murphy, a Democrat, announced the deal alongside Assembly Speaker Craig Coughlin, Senate President Steve Sweeney and Lt. Gov. Sheila Oliver.
For Murphy, the agreement fulfills a core campaign promise of raising taxes on the wealthy.
The rebate would go to single people with at least one child and earning up to $75,000 and to families making up to $150,000, Murphy said. It would be means-tested, the governor said, so all those eligible may not receive the top rebate of $500.
The marginal tax rate would rise from 8.97% to 10.75% on income over $1 million.
The tax rebate was Coughlin’s idea, according to Sweeney, and follows years of Sweeney sparring with Murphy over taxing the wealthy. Sweeney opposed the idea after earlier supporting. He argued the 2017 federal tax cut that slashed a tax deduction for local taxes hurt middle-class families.
“The pandemic hit, and things have changed,” he said. “We have to face the reality that a lot of families are hurting.”
Murphy declined to go into detail about the rest of the budget but said he and legislators are close to finalizing a plan.
The deal comes as the Legislature and Murphy hash out a nine-month budget that is due by Sept. 30.
Officials extended the current fiscal year because of the coronavirus outbreak, and must pass a balanced fiscal 2021 budget by the end of the month.