Change in N.J. payroll tax deduction rate to save workers an average of in 2012 | Economy | NewJerseyNewsroom.com -- Your State. Your News.

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Change in N.J. payroll tax deduction rate to save workers an average of $87 in 2012

NJDollars030911_optBY TOM HESTER SR.
NEWJERSEYNEWSROOM.COM

Gov. Chris Christie Monday announced a $190 million payroll tax cut he said is designed to provide a tax savings of $87 annually for working New Jersey families in 2012.

On July 1, Christie signed Democratic legislation into law authorizing the state Department of Labor and Workforce Development to calculate a new payroll-deduction rate to finance the Temporary Disability Insurance (TDI) fund. For most workers next year, the revised formula means the amount of TDI payroll tax deducted from their paychecks will be reduced from $148 to $61 per year, for a savings of $87 per worker. The changes take effect on Jan. 1.

Christie made the announcement at a meeting with employees of Kearfott Guidance & Navigation, a Little Falls company with over 235 employees that manufactures guidance systems used in space shuttles, satellites, under sea oil exploration and radar equipment.

“By prioritizing economic growth and taking concrete steps to improve our state’s climate for business growth and job creation, we are finally getting New Jersey back on the right track and creating Jersey jobs, while also providing critical tax relief for our state’s overburdened families,” Christie said. “$190 million in direct tax relief will go directly into the pockets of working families and back into our economy, further spurring growth and job creation around the state. Taken together with $57 million in payroll tax relief we provided this year in worker contributions to the Family Leave Insurance Program, this means we are delivering nearly $250 million in relief to New Jerseyans over the course of 2012.”

The $87 savings will appear in paychecks over the course of 2012.

“New Jersey workers have been paying much more into the disability fund than what is needed to keep it solvent. This change is not only fairer to New Jersey workers, it also leaves people with more spending money to put back into our economy,” Labor Commissioner Harold J. Wirths said.

Previously, the tax was based on a flat tax rate of one-half of one percent (0.5 percent) on each worker’s taxable wages. With a taxable wage base of $29,600 in 2011, the worker maximum contribution was $148. The new rate for 2012, which will be adjusted on an annual basis, will be two tenths of one percent (0.2 percent) and is based on the provisions set forth in the recently signed legislation. With a taxable wage base of $30,300 in 2012, the worker maximum contribution will be $61.

The tax change was sponsored in the Senate by Senators Shirley Turner (D-Mercer) and Fred Madden (D-Camden).

“Even if we had to wait three months for the official announcement, it is still good news to see Governor Christie highlighting the payroll tax cut that Senator Madden and I sponsored,” Turner said. “The governor’s ability to tout ideas that were developed by others, including those from different political parties, is a positive sign that he is heeding our call to work on the economy.



 
Comments (1)
1 Tuesday, 18 October 2011 09:26
John Itanimulli
An empty gesture as it will not come anywhere near to offsetting property tax increases.

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