The Tax Foundation recently conducted a study of the tax climates in each of the fifty states and then rated and ranked them based on five categories: corporate tax, individual income, sales tax, unemployment insurance tax, and property tax. The Tax Foundation’s rankings are designed to show how well state tax systems are structured, rather than simply rank the states by the amount of taxes assessed.
New Jersey finished dead last in overall tax climate and it ranked in the individual tax categories as follows: 42 (corporate tax), 48 (individual income tax), 45 (sales tax), 25 (unemployment insurance tax), and 50 (property tax). New Jersey was also ranked 43rd in each of the three preceding years.
Corporate income taxes are levied in 44 states while Nevada, Ohio, Texas, and Washington impose gross receipts taxes instead of corporate income taxes. South Dakota and Wyoming are the only states that do not levy a corporate income or gross receipts tax.
Twenty-seven states and the District of Columbia have single-rate corporate tax systems. A single-rate system may remove the incentive for firms to engage in financially improvident tax planning to reduce the negative effects of higher marginal tax rates levied by states as taxable income increases.
New Jersey along with Minnesota, Alaska, Connecticut, and the District of Columbia have corporate income tax rates of 9 percent or higher. New Jersey has three tax brackets for corporate income tax. Corporate income of less than $50,000 is taxed at a rate of 6.50%. Corporate income greater than $50,000 and less than $100,000 is taxed at a rate of 7.50%. Finally, any corporate income over $100,000 is taxed at the rate of 9.00%.
It is wise for both individual and business taxpayers located in New Jersey to consult with a tax professional to help assess their current tax situation, looking ahead to the future. If you have any question about taxes, especially in planning ahead for the next filing season, call THE TAX EXPERTS at the Thorgood Law Firm www.thorgoodlaw.com. For a FREE consultation call 212-490-0704.
