Gov. Phil Murphy says he and fellow Democratic legislative leaders have agreed to raise income taxes on millionaires while also giving about 800,000 families a $500 tax rebate.

Murphy announced the deal Thursday alongside Assembly Speaker Craig Coughlin, Senate President Steve Sweeney and Lt. Gov. Sheila Oliver.

The agreement fulfills a core campaign promise Murphy made of raising taxes on the wealthy. The deal increases the state tax on people making between $1 and $5 million.

Murphy says 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. The checks will go out next summer. Gov. Murphy says it's great news.

"Many of our middle class and working families were laid low when the steps we have had to take, painful steps I might add, to protect families and save lives in the pandemic meant that they couldn't go to work,” says Gov. Murphy. “Now, we're going to help by giving them back some of what they lost."

But Republican leaders say it will cause people to leave the state.

"They built a business, they worked hard and they created jobs,” says Assembly Minority Leader Jon Bramnick. “So, what you're going to say to those people is, well you're successful, and now what we're going to do is we're going to take 10% of your income, versus Florida that takes zero."

It will go into effect Oct. 1, providing the state budget is approved by then. AP wire services helped contribute to this report.