NJ is no longer highest in the nation for this tax

New Jersey loses its title as most burdensome for corporate income tax rates.

For three years, New Jersey levied the highest corporate tax rate in the country. But with a recent move by officials, the state now has the fourth highest rate, according to a report from the Tax Foundation.

New Jersey's top marginal corporate income tax rate fell from 11.5% in 2023, to 9% in 2024. New Jersey's 2.5% business tax surcharge, which had been in effect for six years, was allowed to expire at the end of 2023.

The surcharge applied to business income exceeding $1 million.

Alaska, Illinois, and Michigan now top New Jersey's rate, the report shows.

Business groups lobbied Gov. Phil Murphy to let the surcharge expire, but there were also calls on the other side to renew the extra tax, perhaps as a way to fund New Jersey Transit.

Corporate income taxes are levied in 44 states, the Tax Foundation says. Twenty-nine states and Washington, D.C. have single-rate corporate tax systems.

In October, New Jersey ranked dead last in the Tax Foundation's 2024 State Business Tax Climate Index. The state's ranking is likely improve due to the expiration of the surtax.

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