For the seventh straight year, New Jersey ranks dead last in the Tax Foundation’s 2022 State Business Tax Climate Index, an annual comparison of the tax systems in all 50 states designed to help inform decisions made by business leaders and government policymakers – and chart a course for improvements.
“It’s true that taxes are but one factor in business decision-making. However, economic evidence shows that states with the best tax systems will be the most competitive at attracting new businesses and most effective at generating economic and employment growth,” the foundation said.
The report, released on Thursday, ranked New Jersey’s tax structure the worst at No. 50 overall.
“As we continue the conversation about the great need to make New Jersey more affordable, the annual Tax Foundation report shows just how much of an outlier we are in the nation when it comes to taxes,” NJBIA President and CEO Michele Siekerka said.
“Unfortunately, absent a real commitment to address our affordability challenges by our policymakers, New Jersey will continue to struggle to compete and will only maintain and enhance its reputation of not being business friendly.”
Breaking down the different types of taxes levied, New Jersey has the highest top corporation business tax rate (11.5%) in the nation because a surcharge that was supposed to drop to 10.5% in 2021 has been extended until 2023. The Tax Foundation ranks New Jersey No. 48 overall for the corporation business tax because its national rankings also take into account the number of brackets and base inclusions, the study’s author said.
New Jersey’s gross income tax (top rate 10.75%) was also ranked No. 48 and its property taxes were ranked among the worst in the nation.
The states with the best business tax climates were Wyoming, South Dakota, Alaska, Florida, Montana, New Hampshire, Nevada, Tennessee, Indiana and Utah.
Nevada, South Dakota, and Wyoming have no corporate or individual income tax (though Nevada imposes gross receipts taxes); Alaska has no individual income or state-level sales tax; Florida and Tennessee have no individual income tax; and New Hampshire and Montana have no sales tax.
