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The weeds of corporate taxation may sometimes be difficult to explain, but the concept that the grass can be greener in New Jersey for corporate taxes is easier to understand.  

And that’s exactly what all panelists conveyed in NJBIA’s Taxing Your Bottom Line event this week. 

With the likely sunset of the 2.5% corporation business tax surtax and a CBT reform bill, the state appears to be aiming to get more competitive. 

“The perspective from the (Murphy) administration is there is agreement that the intent is to make New Jersey more competitive,” said New Jersey Deputy State Treasurer Aaron Binder. 

“Even with the expiration of the surcharge, New Jersey’s corporate tax rate is going to be higher than most states. However, for our regional competitiveness, (the sunset) puts us more in line with those states.”   


New Jersey’s current 11.5% CBT rate is the highest in the nation, by a long shot.  

In 2018, a temporary CBT surcharge of 2.5% was supposed to phase down by 2021. But it was extended by the Legislature until the end of 2023. 

Gov. Phil Murphy has committed to the sunset of the surtax, while Senate Budget Chair Paul Sarlo has also been a strong advocate of letting the surtax expire. 

During the CBT panel, which was moderated by NJBIA Chief Government Affairs Officer Christopher Emigholz, Garden State Initiative Policy Director Audrey Lane highlighted the considerable efforts of Iowa, Indiana, North Carolina and Pennsylvania to reduce their CBT rates. 

While highlighting the benefits of the CBT decreases in those and other states – including the growth of personal income as a way to offset the loss of corporate revenue and increases in jobs and salaries – Lane also noted how states are using a “stair step method” of lowering the rate over a span of years to become more competitive. 

“These states put up guardrails for (CBT reductions),” Lane said. “If their revenue wasn’t hitting certain marks, the reduction in the rate was not enacted. 

“So, it’s a really smart policy move, and our research shows it was effective.” 


The panel conversation also focused on how New Jersey will improve its competitive edge if it brings much-needed reform to how it taxes income earned abroad by U.S.-controlled foreign corporations – a category of taxes called global intangible low-taxed income, or GILTI.  

NJBIA worked closely with the Treasury department and corporations on bills S-3737 (Sarlo, D-36)/A-5323 (Pintor Marin, D-29) which would make several changes to New Jersey’s tax code – most notably excluding 95% of GILTI. 

New Jersey is currently one of 20 states to tax GILTI at all and is one of only 12 states that continues to only exclude 50% of GILTI.  

“I think that this bill really does a lot to make us more competitive,” said Michael Puzyk, EY’s senior manager in Indirect Tax Group. “It at least takes out a lot of features that made New Jersey an outlier, not only nationally, but more importantly, regionally.” 

“One of the things corporations are happy about in this bill is the GILTI fix is actually a fix,” added David Shipley, co-chair, State and Local Tax Group for Stevens & Lee. “They’re now treating it as a dividend and subjecting it as a tax in the same manner. I think that’s consistent from a policy perspective as to what GILTI income really represents.” 

Much like the sunset of the CBT surtax, the reform of how New Jersey taxes GILTI has been opposed by progressive groups that say it’s a huge tax break for New Jersey corporations. 

“People who are saying, ‘Hey, this is just like any other income’ really don’t understand what GILTI is,” Shipley added. “If you think of it, this is income not just earned outside of New Jersey, but outside of the United States that is coming back to a parent company in New Jersey.  

“Having a tax on GILTI is really taxing companies that have foreign subsidiaries – which are the exact companies we want to have in New Jersey. So, I think this is a good fix.”