New Jersey levies the nation’s highest top statutory corporate tax rate at 11.5%, according to a new report released Tuesday by the Tax Foundation.
Only six other states have top corporate income tax rates higher than 9% including: Pennsylvania (9.99%), Iowa and Minnesota (both at 9.8%), Illinois (9.5%) and Alaska (9.4%). No state has a corporate income tax exceeding 10% except New Jersey.
NJBIA Vice President of Government Affairs Christopher Emigholz said report on 2022 tax rates underscores New Jersey’s position as an outlier on tax policy.
“No other state has a double-digit corporate income tax rate,” Emigholz said. “New Jersey’s 11.5% top rate harms our competitiveness by discouraging companies from locating here and discouraging existing businesses from expanding here instead of in another state with a more favorable tax climate.”
Of the 44 states that levy a corporate income tax, North Carolina’s flat rate of 2.5% is the lowest, followed by Missouri and Oklahoma (both 4.5% flat rate), the Tax Foundation report said.
“A single-rate system minimizes the incentive for firms to engage in economically wasteful tax planning to mitigate the damage of higher marginal tax rates that some states levy as taxable income rises,” the Tax Foundation said.
New Jersey’s corporate income tax rate brackets are: 6.5% for income up to $50,000; 7.5% for net income over $50,000 but less than $100,000; 9% for net income over $100,000 but less than $1 million; and 11.5% for net income over $1 million because of a 2018 law that enacted a 2.5% surcharge set to expire in Dec. 31, 2023.