LITTLE FALLS – Gov. Chris Christie announced a payroll tax cut that is expected to allow most New Jersey workers to save about $87 per year. The tax cut, which takes effect next year, results from changes to the Temporary Disability Insurance fund payroll taxes.
Christie made the announcement at a town hall yesterday with employees of Kearfott Guidance & Navigation, a company founded in 1917, that manufactures guidance systems used in space shuttles, satellites, under sea oil exploration and radar equipment, in Little Falls. The company was impacted by flooding caused as a result of Hurricane Irene, experiencing over two feet of water in their plant. After one week, they were back and operating at 90 percent capacity.
“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. $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,” Christie said. “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.”
On July 1, Governor Christie signed legislation into law authorizing the Department of Labor and Workforce Development to calculate a new payroll-deduction rate to finance the state 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, 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,” said Harold J. Wirths, commissioner of the Department of Labor and Workforce Development.
Previously, the tax was based on a flat tax rate of one-half of one 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 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.
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