New Jersey has enacted legislation that makes the following individual income tax changes. The rate changes affect New Jersey residents and non-residents.

Gross income tax rates
Prior to this legislation, regardless of filing status, taxpayers were subject to a tax rate of 6.37% on gross income above $400,000 and a tax rate of 8.97% on gross income above $500,000.

The legislation would increase the 2009 gross income tax rates as follows:

• greater than $400,000 but not over $500,000 from 6.37% to 8%;
• greater than $500,000 but not over $1,000,000 from 8.97% to 10.25%;
• greater than $1,000,000 from 8.97% to 10.75%.

Property tax deduction
Prior to this legislation, taxpayers were permitted to claim a property tax deduction of up to $10,000. The legislation suspends this deduction for 2009 for those taxpayers who have a gross income of more than $250,000 and are not at least 65 years of age and are not allowed to claim a deduction for blindness or disability. Additionally, the bill caps the maximum property tax deduction to $5,000 for taxpayers who have gross income of more than $150,000 but less than $250,000.

New Jersey lottery winnings
Prior to this legislation, New Jersey lottery winnings were not taxable. The legislation, for tax years beginning after 2008, would tax lottery winnings from prizes exceeding $10,000 and requires gross income tax withholdings on the winnings at the rate of 3%.