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New Jersey Set to Increase Corporate Tax Rate to Highest in Nation

Tax Development Jul 09, 2024

New Jersey Set to Increase Corporate Tax Rate to Highest in Nation

On June 28, 2024, the New Jersey Legislature approved, and Governor Phil Murphy signed, state budget legislation including a new corporate transit fee. The fee, originally proposed by the governor earlier this year, would be a 2.5% addition to the corporate tax rate for businesses with New Jersey net taxable income over $10 million. Affected corporations would pay an effective rate of 11.5%, the highest state corporate income tax rate in the nation.

The fee replaces a 2.5% corporate business tax surcharge that expired last year. Lawmakers anticipate that the fee will apply to around 600 large companies, mostly from out of state, and generate around $1 billion per year. The fee is intended to help the state’s transit system, which faced a $107 million budget deficit for its upcoming fiscal year. New Jersey’s budget legislation also maintains the state’s $6.1 billion rainy day fund, which is required for the state to continue the Stay NJ property tax relief program for seniors.  

“State budgets are a statement of the governor’s and legislature’s priorities,” said Argi O’Leary, Principal at Ryan. “After years of promising no new taxes, it is disappointing Governor Murphy chose to level a new tax on businesses. Although the corporate transit fee is scheduled to sunset after five years, implementing the highest state corporate income tax rate in the country will undoubtedly impact New Jersey’s economic competitiveness.” 

If you have questions about how this legislation or other tax matters will impact your business, reach out to the Ryan tax experts listed below.


Argi O’Leary

Duane Dobson

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