The Nation’s Highest Business Tax Could Be Reinstated in New Jersey

A year ago, Gov. Philip D. Murphy of New Jersey spoke proudly about his plan to let a corporate business tax expire, framing it as a promise kept in a state striving to compete for entrepreneurs.

“Allowing this surcharge to lapse will mean more money for them to create jobs, to invest in new and more efficient equipment, to lower costs to consumers and to be able to stay here,” Mr. Murphy, a Democrat, said as he unveiled his budget blueprint last February.

He was successful. And the tax expired two months ago.

On Tuesday, Mr. Murphy will propose reversing course and again implementing a corporate business tax of 11.5 percent — the nation’s highest rate — for the state’s most profitable companies, according to several of his aides. He is expected to present the restoration of the tax as part of a permanent solution to the dire financial condition of New Jersey’s statewide transit system during his annual budget address at the State House.

There is a key difference in this proposed corporate surtax: The 11.5 percent rate, if adopted, would apply only to companies with profits in excess of $10 million a year, up from the previous threshold of $1 million.

The Murphy administration said that between 600 and 700 companies would be obligated to pay the extra 2.5 percent surcharge on top of the state’s base corporate rate of 9 percent. (Until January, when the old tax formula expired, roughly 3,000 companies paid the highest rate.) Still, the governor’s aides said it would generate about $800 million a year in revenue.

Starting in mid-2026, that extra revenue would be earmarked for New Jersey Transit, which faces large and growing deficits. But Mr. Murphy does not see the tax — he is calling it the “corporate transit fee” — as an alternative to the fare increases New Jersey Transit plans to impose.

Back to top button