New Jersey Business Taxes at a Glance
New Jersey sits between New York and Philadelphia, and many residents earn income across state lines. That makes allocation, credits, and withholding central to New Jersey tax work. New Jersey also has its own income tax rules, a corporate tax with a surcharge on large companies, an entity-level tax option for pass-throughs, and payroll contributions that employees pay. BOMCAS helps New Jersey individuals and businesses with each of these.
The Gross Income Tax
New Jersey's personal income tax is called the Gross Income Tax. It uses graduated rates and its own definitions of income. Like Pennsylvania, New Jersey sorts income into categories, and a loss in one category generally cannot offset income in another. A loss from a business cannot reduce wage income, for example. New Jersey also treats some retirement and investment income differently from federal rules.
We prepare the New Jersey return from source documents and keep New Jersey-specific carryforwards and basis records separate from federal ones.
New Jersey Residents Working in New York
Many New Jersey residents work in New York City. New York taxes them as nonresidents on wages for work performed in New York, and New Jersey gives residents a credit for tax paid to other states. Because rates and rules differ, the credit does not always fully offset the tax.
Remote work adds a complication. New York's convenience-of-the-employer rule can treat days worked from home in New Jersey as New York days for some employees. New Jersey adopted a similar rule of its own, which applies in some circumstances to nonresidents who work remotely for New Jersey employers. We review allocations, help claim credits, and assist employees and employers with withholding.
The Pennsylvania Reciprocal Agreement
New Jersey and Pennsylvania have a reciprocal agreement for wages. A New Jersey resident working in Pennsylvania pays New Jersey income tax on those wages, and a Pennsylvania resident working in New Jersey pays Pennsylvania tax, if the right exemption form is filed with the employer. The agreement covers wages only; business income and Philadelphia local taxes are handled separately.
Corporation Business Tax and the Corporate Transit Fee
C corporations doing business in New Jersey pay the Corporation Business Tax (CBT) on income allocated to the state, with a minimum tax based on gross receipts. New Jersey uses combined reporting for unitary groups. Larger corporations with allocated income above a high threshold also pay a Corporate Transit Fee, which applies for a set number of years.
S corporations file New Jersey returns and may owe a minimum tax. We prepare CBT returns, manage combined group filings, and track New Jersey-specific adjustments.
BAIT for Pass-Through Entities
New Jersey's Pass-Through Business Alternative Income Tax (BAIT) lets partnerships, S corporations, and LLCs elect to pay tax at the entity level. Owners receive a credit on their New Jersey return. Other states may also give credits for BAIT paid, depending on their rules. We evaluate whether BAIT helps the owners, make the election, and track payments and credits.
Sales and Use Tax
New Jersey has a statewide sales and use tax, with a reduced rate in certain Urban Enterprise Zones for qualifying businesses. Clothing and most food are exempt, while many services, such as certain repair, installation, and information services, are taxable. Businesses must register and file regularly. We prepare returns and review use tax on purchases.
Selling Real Estate as a Nonresident
When a nonresident sells real property in New Jersey, an estimated income tax payment is generally required at closing, with a form filed with the deed. The payment is applied to the seller's New Jersey nonresident return for the year. Residents also complete a form to show they are exempt from the payment. We help sellers estimate the tax, prepare the forms, and file the nonresident return to recover any overpayment.
Inheritance Tax After the Estate Tax Repeal
New Jersey repealed its estate tax for deaths on or after January 1, 2018, but its inheritance tax remains. Transfers to spouses, children, grandchildren, and certain other close relatives are generally exempt, while transfers to siblings, nieces and nephews, and unrelated beneficiaries can be taxed. Banks and brokerages may need a tax waiver before releasing some assets. We help executors determine which beneficiaries are affected, prepare the return or waiver requests, and keep estate records organized.
Payroll in New Jersey
New Jersey payroll includes contributions that employees, not just employers, pay:
- New Jersey income tax withholding
- Unemployment insurance, with employee contributions
- Temporary disability insurance (TDI)
- Family leave insurance (FLI)
- Workforce development contributions
Employers file quarterly reports with the Department of Labor and Workforce Development. Cross-state employees need withholding set up for the right state. We run payroll, file reports, and reconcile wages to the books.
Pharma, Warehousing, Finance, and the Shore
- Pharmaceuticals and life sciences: multistate apportionment and research credits on federal returns
- Logistics and warehousing: fixed assets, payroll volume, and sales tax on equipment
- Professional services and finance: cross-border employees and BAIT planning
- Real estate and hospitality: realty transfer fees, nonresident sellers, and shore-area seasonal business
Bookkeeping for New Jersey Requirements
New Jersey filings depend on income by category, wages by work location, and gross receipts for the CBT minimum tax. We set up the books to provide these figures and close each month with reconciled accounts.
Contact BOMCAS About New Jersey
Commuters to New York and Philadelphia, owners weighing BAIT, and nonresidents selling New Jersey property can contact BOMCAS for a remote review. We plan to add New Jersey city pages, each with its own services, under this section. See the BOMCAS home page and our United States services for more. This page explains New Jersey's system generally and is not advice for your situation.
Talk to BOMCAS About Your New Jersey Taxes
Have a question about your New Jersey filings, payroll or bookkeeping? Contact BOMCAS or use the contact form below, and we will get back to you as soon as possible. You can also browse all United States services.