New Jersey Governor Flip-Flops on Corporate Business Tax Surtax Expiration

By , and on February 27, 2024

After months of insisting that he would not allow New Jersey’s 2.5% corporate business tax surtax to be extended – and previously having allowed it to lapse for tax years beginning on January 1, 2024 – New Jersey Governor Phil Murphy is now proposing that the surtax be revived for companies earning profits that exceed $10 million a year (up from the prior threshold of $1 million). The proposal appears to apply retroactively to January 1, 2024.

This will cause New Jersey to once again have the highest corporate income tax rate in the nation at 11.5%. According to the New York Times, Governor Murphy is selling the revival of the surtax as a “corporate transit fee” because the extra revenue will be earmarked for New Jersey Transit.

The governor’s proposed flip-flop is expected to receive significant pushback from the business community. The New Jersey Chamber of Commerce, which has already called the governor’s proposal a “nightmare scenario for New Jersey,” has indicated that it will be meeting with the Murphy administration and legislative leaders to voice their opposition.

Stephen P. Kranz
Stephen (Steve) P. Kranz is a tax lawyer who solves tax problems differently. Over the course of his extensive career, Steve has acquired specific skills and developed a unique approach that helps clients develop and implement holistic solutions to all varieties of tax problems. He combines strategic thinking with effective skills for the courtroom, the statehouse and the conference room. Read Stephen Kranz's full bio.

Michael J. Hilkin
Michael J. Hilkin represents clients in all aspects of complex state and local tax matters. He has a particular focus on tax controversy and transactional issues relating to state and local income, franchise, sales and use, gross receipts and other business taxes. Michael has extensive experience handling state and local tax issues before US administrative and judicial systems. Read Michael Hilkin's full bio.

David Jasphy
David Jasphy focuses his practice on state and local tax matters. He represents clients in all stages of tax controversy from audit through appellate litigation. He also provides planning and compliance strategies for clients with complex multistate tax concerns. Read David Jasphy's full bio.




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