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Division of Taxation

Important Income Tax Changes for Tax Year 2006

  • NJ TeleFile Discontinued
    The NJ TeleFile System, that allowed taxpayers to file their returns by phone, has been discontinued. Taxpayers who want to file their returns electronically can use one of the other NJ FastFile options.

  • Earned Income Tax Credit Schedule
    The Earned Income Tax Credit Schedule no longer appears on page 3 of the Form NJ-1040 but is now included in the instruction booklet. Eligible taxpayers must complete the schedule to calculate the amount of their New Jersey earned income tax credit. Taxpayers who asked the Internal Revenue Service to calculate their Federal earned income credit must fill in the oval at Line 50, Form NJ-1040 to receive their New Jersey earned income tax credit.

  • Designated Contribution
    The World Trade Center Scholarship Fund has been added to the list of organizations to which taxpayers can contribute on the New Jersey tax return. To donate to the new fund, taxpayers must specify code number "07" at the "Other Designated Contribution" line.

  • Sheltered Workshop Tax Credit
    A new credit is available to certain taxpayers that employ qualified handicapped person(s) in a "sheltered workshop" arrangement. Eligible taxpayers must complete Form GIT-317 to calculate the amount of their credit.

  • Use Tax Due on Out-of-State Purchases
    The New Jersey sales and use tax rate increased from 6% to 7% on all retail sales of taxable merchandise or services occurring on or after July 15, 2006. When calculating the exact amount of use tax due on their out-of-State purchases to report on Form NJ-1040, taxpayers must use the rate in effect at the time of the purchase.

  • Total Property Taxes Paid
    Taxpayers are now required to enter on their income tax return the total property taxes due and paid during 2006 on their qualified principal residence in New Jersey. For tenants, 18% of the rent paid during the year is considered property taxes paid.

  • Homeowner on October 1, 2006
    Taxpayers who owned, occupied, and paid property taxes on a home in New Jersey that was their principal residence on October 1, 2006, must fill in the oval at Line 36b, Form NJ-1040. Taxpayers who were tenants on October 1, 2006, or who were not homeowners on October 1, 2006, do not fill in the oval.

  • Credit for Taxes Paid to Other Jurisdictions
    The Philadelphia nonresident wage tax rate for 2006 is 3.7716%.

  • Property Tax Reimbursement
    The Property Tax Reimbursement (PTR) Program reimburses eligible senior citizens or disabled persons for property tax increases. Eligible residents must file a 2006 Property Tax Reimbursement Application (Form PTR-1 or PTR-2) by the extended due date of October 31, 2007. The original due date was June 1, 2007.

    Income Limits. For residents applying for reimbursements for tax year 2006, total annual income must be less than:

    For 2006: $43,693 if single, or $53,576 (combined income) if married, and
    For 2005: $41,972 if single, or $51,466 (combined income) if married.

    Note: Benefits available under this program are subject to change.

  • Homestead Credit/Rebate Program
    The Homestead Credit/Rebate Program (previously referred to as the FAIR Rebate) provides credits or rebates for New Jersey homeowners and tenants who meet the eligibility requirements. How you apply is determined by whether you were a homeowner or a tenant on October 1, 2006. Homeowners and tenants file different applications.

    -Tenants who meet the eligibility requirements use the application in the income tax booklet, Form TR-1040, to apply for the homestead rebate for tenants.

    -Homeowners do not use the application in the income tax booklet. Applications are expected to be mailed at the beginning of May to homeowners who were 65 years of age or older or disabled on December 31, 2006. Applications are scheduled to be mailed to all other homeowners in July.

    Note: Benefits available under this program are subject to change.

  • Gross Income Tax Rates
    There has been no change in the New Jersey gross income tax rates for tax year 2006. Go to "Tax Rates" to view the New Jersey tax tables, tax rates schedules, or NJ-WT, Instruction Booklet for Employers, Payors of Pension and Annuity Income and Payors of Gambling Winnings.

Last Updated: Tuesday, 11/17/20