New Jersey
Taxes and business formation • USA 2025–2026
LLC in New Jersey
Corporation in New Jersey
Tax system of New Jersey
Income Tax
New Jersey uses a progressive personal income tax. Rates start at 1.4% and reach 10.75% for income above $1 million. This is one of the highest rates in the country for high-income residents. At the same time, the state offers various tax deductions, including credits for children, education, and rent, as well as benefits for retirees and low-income families.
Sales Tax
New Jersey's base sales tax rate is 6.625%, with no additional local surcharges, which makes it uniform throughout the state. In designated Urban Enterprise Zones, the rate is reduced to 3.3125% to encourage business activity. Sales tax applies to most goods and a limited list of services, including equipment rentals and hotel services. Notably, groceries, medications, clothing, and certain services are exempt from taxation. Our firm provides professional assistance in obtaining a Sales Tax Certificate and preparing the Sales and Use Tax Return.
Property Tax
New Jersey is known for having some of the highest property taxes in the U.S. The average rate is about 2.21% of assessed value and can exceed 3% in some counties. The main reason for such high rates is the funding of school districts, infrastructure, and local government. Property is assessed at the municipal level and can vary significantly. Owners of a primary residence may be eligible for tax relief and programs that refund part of the tax paid.
Business Taxes
New Jersey levies a Corporate Business Tax on a progressive scale depending on the amount of profit. The rates are: 6.5% on profits up to $50,000, 7.5% from $50,001 to $100,000, and 9% on profits above $100,000. In addition, the state imposes a Minimum Tax, which is levied even in the absence of profit and depends on gross income. S-corporations are taxed at a reduced rate. All companies doing business in New Jersey are required to file an Annual Report each year through the online portal of the Division of Revenue and Enterprise Services. If you have difficulty filing the Annual Report, our firm provides services for preparing and filing this report.
Excise Taxes
New Jersey levies excise taxes on fuel, alcohol, tobacco products, electronic cigarettes, car rentals, and gambling. The state actively regulates the sale of these categories of goods, particularly with respect to licensing and turnover control. In addition, a tax on plastics and single-use electronic items has been in effect since 2021.
Estate / Inheritance Tax
Charged to the recipients of an inheritance; the rate depends on their degree of kinship and the amount of property received.
Favorable Tax Conditions
Despite the high rates of some taxes, New Jersey offers favorable conditions for certain categories of business. For example, reduced rates in Urban Enterprise Zones, benefits for manufacturing companies and technology startups, and grants and tax credits for employers that create jobs. It should also be noted that unlike a number of states, New Jersey does not fully tax retirement payments if the taxpayer's income is below a certain threshold, which can benefit pre-retirees. The high personal income tax rates are partially offset by tax benefits: the Earned Income Credit, Child Tax Credit, and property tax relief for homeowners.
Compared to Other States
Compared with other states, New Jersey has one of the highest corporate taxes at 9%–11.5% (including a 2.5% surtax on profits above $10 million); for comparison, California's is 8.84% and Illinois's is 9.5%. New Jersey is in the top three states for personal income tax, especially for wealthy residents. The top rate is 10.75% (California is 13.3%, New York is 10.9%). It is the most expensive state for property tax at 2.21% (Illinois is 2%, Florida is 0.83%). However, the sales tax rate is fixed and does not depend on the county, which simplifies calculation and administration. As in many other states, New Jersey also imposes a tax on business tangible personal property, and asset owners are required to file the corresponding reports.
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