New Jersey has some of the highest business and personal taxes in the country. The Corporation Business Tax charges up to 9% on all of a company's income, and large corporations pay a 2.5% Corporate Transit Fee on top, for an 11.5% rate. The top personal rate is 10.75%, and property taxes are the highest in the nation. In return, New Jersey offers access to the New York and Philadelphia markets, a highly educated workforce and the BAIT election, which helps pass-through owners cut their federal taxes.
This guide covers New Jersey's business taxes for 2026, with worked examples and comparisons with New York, Pennsylvania and Delaware.
New Jersey business taxes at a glance
A New Jersey C corporation pays 6.5%, 7.5% or 9% of all its income depending on how much it earns, plus a minimum tax based on receipts. Pass-through owners pay graduated personal rates, with 6.37% applying to most income between $75,000 and $500,000. Most pass-through businesses elect the BAIT to make state tax deductible federally. Customers pay a 6.625% sales tax with no local add-ons. LLCs pay $125 to form and $75 for each annual report, and multi-owner entities pay $150 per owner each year. Property taxes are the highest in the country, and employers pay unemployment, disability and family leave insurance contributions.
Corporation Business Tax (CBT)
| Entire net income | Rate (applies to all income) |
|---|---|
| $50,000 or less | 6.5% |
| $50,001 to $100,000 | 7.5% |
| Over $100,000 | 9% |
| Allocated income above $10 million | 9% plus 2.5% Corporate Transit Fee (11.5%) |
Unlike most states, New Jersey applies the rate to all of a company's income once it crosses a threshold. A corporation earning $100,001 pays 9% on every dollar, not just the dollar above $100,000.
- Minimum tax: $500 to $2,000 based on New Jersey gross receipts.
- Apportionment: Single sales factor with market-based sourcing.
- Combined reporting: Mandatory for unitary groups since 2019.
- Credits: Emerge and Aspire programs, research and development credits, and the Angel Investor credit.
- Returns: Form CBT-100 is due on the 15th day of the fourth month after year-end.
Personal income tax and pass-through owners
| Taxable income (single, 2026) | Rate |
|---|---|
| $0 to $20,000 | 1.4% |
| $20,000 to $35,000 | 1.75% |
| $35,000 to $40,000 | 3.5% |
| $40,000 to $75,000 | 5.525% |
| $75,000 to $500,000 | 6.37% |
| $500,000 to $1,000,000 | 8.97% |
| Over $1,000,000 | 10.75% |
- LLC owners, partners and sole proprietors pay these rates on profit.
- S corporation shareholders pay on their share. New Jersey S corporations also pay the minimum tax.
- BAIT: The Pass-Through Business Alternative Income Tax lets entities pay tax at rates from 5.675% to 10.9%. Owners claim a refundable credit.
- Partnership filing fee: $150 per owner for partnerships with more than two owners, capped at $250,000.
Sales and use tax
| Item | Rate |
|---|---|
| General sales | 6.625% |
| Urban Enterprise Zone qualified sales | 3.3125% |
| Atlantic City and some tourism areas | Additional luxury and hotel taxes |
- Clothing and groceries are exempt.
- Services: New Jersey taxes many services, including landscaping, janitorial services, tattooing and some information services.
- Remote sellers with more than $100,000 of New Jersey sales or 200 transactions must collect.
Payroll and property taxes
- Unemployment insurance: Employers pay on a wage base above $43,000, one of the highest in the country.
- Temporary Disability Insurance and Family Leave Insurance: Funded mainly by employee contributions withheld by employers; employers pay a small TDI contribution.
- Newark payroll tax: Employers in Newark pay 1% of payroll.
- Property tax: The highest in the country, averaging more than 2% of home value. Commercial property owners pay the same rates set by each municipality.
Forming a business in New Jersey: fees and ongoing costs
| Item | LLC | Corporation |
|---|---|---|
| Formation filing fee | $125 | $125 |
| Annual report | $75 | $75 |
| Partnership filing fee | $150 per owner (more than two owners) | Not applicable |
| Minimum tax | Not applicable (unless taxed as a corporation) | $500 to $2,000 |
| Registered agent | Required | Required |
Worked example: $500,000 of profit
| Step | Amount |
|---|---|
| Entire net income | $500,000 |
| New Jersey CBT at 9% (applied to all income) | $45,000 |
| Federal tax at 21% on $455,000 | $95,550 |
| Total income tax | $140,550 (28.1%) |
For a single LLC owner with $150,000 of New Jersey taxable income, state tax is about $7,431. At $75,000 it is about $2,653. Electing the BAIT can make this tax deductible federally, saving several thousand dollars for high-earning owners.
How New Jersey compares with its neighbors
| State | Corporate rate | Top personal rate | State sales tax |
|---|---|---|---|
| New Jersey | 6.5% to 9% (11.5% above $10M) | 10.75% | 6.625% |
| New York | 6.5% to 7.25% | 10.9% (plus NYC) | 4% plus local |
| Pennsylvania | 7.49% | 3.07% plus local | 6% |
| Delaware | 8.7% | 6.6% | None |
New Jersey and New York compete for the same metropolitan-area businesses. New York's state corporate rate is lower, but New York City's corporate tax and personal income tax make Manhattan more expensive than most New Jersey locations. Pennsylvania's personal income tax is much lower, though its local earned income taxes add up.
Choosing an entity in New Jersey
- LLC with BAIT: The most common choice for profitable small businesses, because the BAIT makes state tax deductible.
- S corporation: Pass-through treatment with the BAIT available, plus federal payroll tax savings. New Jersey requires a separate S corporation election.
- C corporation: 9% plus 21% federally, or more for very large companies.
Doing business across New Jersey
New Jersey is the most densely populated state, and its businesses cluster around two major metropolitan areas. North Jersey businesses serve the New York City market and often have employees who live in New York, while South Jersey is part of the Philadelphia region. New Jersey and Pennsylvania have a reciprocal agreement for wages, so residents of each state pay income tax only to their home state on wages earned in the other. There is no such agreement with New York, so New Jersey residents working in New York pay New York tax and claim a credit at home. Businesses with remote employees should be aware that New Jersey has challenged New York's convenience of the employer rule and created a similar rule of its own.
Tax planning tips for New Jersey businesses
Elect the BAIT. For most profitable pass-through businesses, the BAIT saves federal tax because the entity-level tax is deductible. Make the election by the return due date, including extensions.
Watch the CBT cliff. Because the rate applies to all income, a corporation earning just over $100,000 pays significantly more than one earning just under it. Timing deductions can keep income below the threshold.
Consider an Urban Enterprise Zone. Qualifying businesses in UEZs charge half the sales tax rate and receive other benefits, which can help retailers attract customers.
Recent changes for 2025 and 2026
- Corporate Transit Fee of 2.5% on large corporations, in effect from 2024 through 2028.
- BAIT continues, with rules updated for changes in the federal SALT deduction.
- Payroll contribution rates for unemployment and family leave adjusted for 2026.
Is New Jersey a good state for business?
Advantages
- Access to New York and Philadelphia markets
- Highly educated workforce and strong pharmaceutical sector
- BAIT election for pass-through owners
- Ports, airports and transportation infrastructure
Drawbacks
- High corporate tax applied to all income
- Top personal rate of 10.75%
- The highest property taxes in the country
- Partnership filing fees and high payroll costs
Compliance checklist
- File a Certificate of Formation or Incorporation with the Division of Revenue and Enterprise Services.
- Register for taxes and employer accounts with Form NJ-REG.
- Register for unemployment, disability and family leave insurance if you hire.
- File the annual report each year.
- Elect the BAIT if it benefits the owners.
- File Form CBT-100, CBT-100S or NJ-1065 each year.
Compare New Jersey with its neighbors below or estimate your taxes in the United States calculator. See Corporation taxes for more.