New Jersey collects tens of billions of dollars in state tax revenue every year, yet the state rarely publishes a single, simple breakdown showing exactly how much comes from each type of tax. Individual taxpayers see their own income tax bill or sales tax receipt, but the bigger picture of how the state funds its budget through income tax, sales tax, and business tax collections is scattered across Treasury reports, legislative budget documents, and U.S. Census Bureau surveys.
The New Jersey Department of the Treasury's own revenue estimates, the Office of Legislative Services' Tax and Revenue Outlook, and the U.S. Census Bureau's Annual Survey of State Government Tax Collections together show how total tax revenue splits between individual income tax, sales and use tax, and business-related taxes such as the Corporation Business Tax. Each category behaves differently from year to year, shaped by everything from stock market gains to corporate loss carryforwards to consumer spending patterns.
Income and sales taxes make up the overwhelming majority of what New Jersey collects, while business taxes, despite carrying some of the highest rates in the country, contribute a comparatively small share of total revenue. Understanding that mix helps explain why certain tax categories draw more legislative attention, why some collections are more volatile than others, and how the state's overall revenue picture holds together from one fiscal year to the next.
Understanding which tax categories generate the most revenue helps taxpayers, business owners, and policymakers see where New Jersey's budget pressure points are. It also explains why certain enforcement priorities, filing deadlines, and rate changes get more attention than others.
A tax-type breakdown is also a useful context for anyone reviewing New Jersey's collection and enforcement data. Public records on audits, bank levies, and payment plans often describe enforcement activity in total dollars without separating that activity by income tax, sales tax, or business tax. Comparing enforcement totals against the underlying revenue mix helps explain which tax categories carry the most weight in the state's overall collection effort.
New Jersey's state budget relies on several major taxes, with the Gross Income Tax and the Sales and Use Tax together accounting for most of the total. The table below summarizes the state's major tax revenue lines for fiscal year 2025 (revised estimate) and fiscal year 2026 (projected), based on the New Jersey Office of Legislative Services' Tax and Revenue Outlook.
Source: New Jersey Office of Legislative Services, Tax and Revenue Outlook, Fiscal Year 2025-2026 (April 2025).
Two categories dominate this list. The gross income tax alone accounts for roughly 37% of the state's total tax revenue, while the sales and use tax adds another 25%. Business-related taxes, including the Corporation Business Tax, the Pass-Through Business Alternative Income Tax, and the Corporate Transit Fee, together make up close to 16% of the total.
New Jersey relies more heavily on individual income tax than most states, a pattern the Tax Foundation and the Census Bureau both attribute to the state's highly progressive rate structure. This section breaks income tax revenue into its two main components: the gross income tax paid by individuals and the pass-through business alternative income tax paid on behalf of business owners.
The Gross Income Tax (GIT) is New Jersey's individual income tax and the single largest source of state tax revenue. Rates are graduated, ranging from 1.4% on the lowest income brackets to 10.75% on income above $1 million, a bracket commonly known as the "millionaires' tax."
GIT collections reached a revised estimate of $20.27 billion for fiscal year 2025, up $571.9 million from the level certified in the original FY 2025 budget. Treasury officials attributed the increase to strong April 2025 tax filings, with final payments for tax year 2024 up more than 20% and quarterly estimated payments up more than 25%, driven largely by a sharp rise in capital gains. The state projects GIT collections will grow to $21.11 billion in fiscal year 2026, a more modest 4.2% increase, as Treasury expects income growth to moderate after an unusually strong filing season.
The Pass-Through Business Alternative Income Tax (PTBAIT) is a New Jersey election that allows partnerships, S corporations, and other pass-through entities to pay income tax at the entity level rather than passing the full liability to individual owners. It was created largely to help business owners work around the federal cap on state and local tax deductions.
PTBAIT collections came in below the original FY 2025 forecast, with Treasury reducing its estimate by $297.1 million, or 6.8%, after collections declined during the first half of the fiscal year. A rebound in the spring, including payments from thousands of taxpayers who had not made PTBAIT payments the prior year, brought the revised FY 2025 estimate to $4.04 billion. Fiscal year 2026 collections are projected to grow modestly to $4.16 billion.
Sales tax is New Jersey's second-largest revenue source and the tax most consumers interact with directly. Unlike many states, New Jersey applies a single statewide rate with no additional county or municipal sales taxes layered on top.
New Jersey's sales and use tax rate is 6.625%, applied uniformly across the state under the Sales and Use Tax Act, N.J.S.A. 54:32B. Because the state does not permit local sales taxes, the average combined state and local sales tax rate in New Jersey is close to the statutory rate itself, unlike states such as New York or Illinois where local add-ons create significant rate variation between cities.
The sales and use tax applies to most retail sales of tangible personal property and to specified services, with common exemptions for groceries, prescription drugs, and most clothing. New Jersey also imposes a Use Tax at the same 6.625% rate on taxable goods purchased out of state and brought into New Jersey without sales tax having been collected, a rule that increasingly applies to online purchases from out-of-state retailers.
New Jersey's Urban Enterprise Zone (UEZ) program allows certified businesses in designated economically distressed areas to charge a reduced sales tax rate of 3.3125%, half the standard statewide rate, on qualifying in-person retail sales of tangible personal property. The program currently covers roughly 37 New Jersey municipalities, including Newark, Jersey City, Paterson, Trenton, and Camden.
To collect at the reduced rate, a business must be certified as a qualified UEZ business and hold a UZ-2 certificate authorizing reduced-rate collection. UEZ-certified businesses must file a separate UZ-50 Sales and Use Tax return monthly. Certified businesses also receive additional benefits, including exemption from sales tax on most purchases of property and services used at the zone location.
New Jersey's sales and use tax collections have grown steadily in recent years. The Office of Legislative Services reported a revised FY 2025 estimate of $13.75 billion, down slightly from the original certification, followed by a projected 5.2% increase to $14.46 billion in fiscal year 2026.
Census Bureau data covering the calendar year 2024 shows New Jersey's general sales and gross receipts tax collections rose to $14.9 billion, up from $14.7 billion the prior year, consistent with the growth trend Treasury has reported in its own fiscal year figures. The two data sets use different fiscal calendars and slightly different tax classifications, which explains the modest gap between the Census and Treasury totals, but both point in the same direction.
Business taxes in New Jersey are collected through several distinct programs rather than a single unified business tax. The most significant is the corporation business tax, supplemented by the newer corporate transit fee and the pass-through entity election described above.
The Corporation Business Tax (CBT) is New Jersey's tax on corporate net income, with rates ranging from 6.5% to 9% depending on the corporation's entire net income. According to the Tax Foundation, New Jersey's 11.5% top marginal corporate rate is the highest of any state that levies a corporate income tax.
CBT collections were revised upward for fiscal year 2025, rising $125.6 million, or 2.9%, from the original certification to $4.46 billion. That strength did not carry into 2026 forecasts. Treasury reduced its FY 2026 CBT projection by $508.5 million after April 2025 collections fell 18% below the prior April, driven largely by a sharp increase in corporations using prior and current net operating losses following the 2023 CBT reform package that allowed unitary filers to pool losses across all members of a combined group.
The Corporate Transit Fee is a 2.5% surtax on New Jersey allocated net income for corporations with income above $10 million, enacted in 2024 to help fund New Jersey Transit after the state's prior corporate surtax expired. The fee is reported separately from the base Corporation Business Tax in Treasury's revenue tables.
Corporate transit fee collections held at $1.02 billion in the revised FY 2025 estimate but are projected to fall to $867.5 million in fiscal year 2026, a 15.2% decline that mirrors the broader softness Treasury is forecasting in corporate tax collections generally.
Beyond the CBT and Corporate Transit Fee, several smaller state taxes touch specific industries or transactions connected to business activity. The Insurance Premiums Tax, Petroleum Products Gross Receipts Tax, and Realty Transfer Fee all carry business-related elements even though they are not classified strictly as corporate income taxes.
The Petroleum Products Gross Receipts Tax, which applies to the sale of gasoline, diesel, and other petroleum products, generated a revised $1.53 billion in FY 2025 and is projected to reach $1.62 billion in FY 2026. The Insurance Premiums Tax, paid by insurers on premiums written in New Jersey, is projected to grow from $620 million to $650 million over the same period.
Placing income tax, sales tax, and business tax collections side by side shows how differently each category has performed in recent years. Income tax collections grew the fastest in dollar terms in FY 2025, largely on the strength of capital gains, while business tax collections weakened due to net operating loss utilization.
Source: New Jersey Office of Legislative Services, Tax and Revenue Outlook, FY 2025-2026. Figures reflect Executive Branch revised and projected estimates as of April 2025.
This comparison highlights a structural feature of New Jersey's tax system. Income and sales taxes together account for roughly 70% of all state tax revenue, while every business-related tax combined contributes less than a tenth of the total, even though corporate rates are among the highest in the country.
New Jersey collects several additional taxes that, while smaller individually, add meaningfully to the state's overall revenue picture. The Casino Revenue Fund, Realty Transfer Fee, Inheritance Tax, and Alcoholic Beverage Excise each fund specific programs or draw from distinct transaction types.
The Casino Revenue Fund captures a portion of gross casino revenue from Atlantic City gaming operations and is projected to grow sharply, from a revised $642.2 million in FY 2025 to $989.9 million in FY 2026, a 54.2% increase tied to the continued expansion of legalized gaming and online betting activity in New Jersey.
The Realty Transfer Fee, assessed when real property changes hands, is projected to rise modestly from $497.5 million to $512.4 million. The Inheritance Tax, one of the few remaining state-level inheritance taxes in the country, is projected to grow from $603.3 million to $614.0 million over the same period, continuing a pattern of steady, incremental growth rather than the volatility seen in income and business tax collections.
The way New Jersey categorizes its tax collections has practical implications for how individuals and businesses meet their filing and payment obligations. Employers, retailers, and pass-through business owners each interact with a different part of this revenue structure and face different deadlines and compliance requirements.
Because the gross income tax is the largest single revenue source, New Jersey places significant emphasis on employer withholding compliance and quarterly estimated payments for self-employed taxpayers and high earners. Employers must register with the NJ Tax Portal to remit withheld income tax, and individuals with significant capital gains, dividends, or business income are generally required to make quarterly estimated payments to avoid interest and penalties.
Retailers with a physical or economic presence in New Jersey, commonly referred to as nexus, are required to register, collect, and remit sales and use tax on taxable transactions. Economic nexus rules mean that even out-of-state and online sellers can be required to collect New Jersey sales tax once their sales into the state cross certain thresholds, a rule that has become increasingly relevant as e-commerce sales continue to grow as a share of total retail activity.
Corporations subject to the Corporation Business Tax and the Corporate Transit Fee must file annual returns and, for larger corporations, make quarterly estimated payments throughout the year. Pass-through entities that elect into the business alternative income tax must make a formal election and generally file and pay by March 15 for calendar-year filers, a separate deadline from the April deadlines that apply to most individual income tax filers.
New Jersey's public records on tax enforcement activity, including audits, bank levies, and Offer in Compromise settlements, typically report total dollars collected without separating that activity by tax type. A recent public records response from the Division of Taxation's Government Records Access Unit, covering fiscal years 2022 through 2025, confirmed that the state does not break out collections by tax type in its enforcement reporting, making it difficult to determine how much enforcement revenue comes from income tax debt versus sales tax debt versus business tax debt.
Comparing that enforcement data against the broader revenue breakdown here offers useful context. Since income and sales tax collections together represent roughly 70% of all state tax revenue, it is reasonable to expect that a large share of enforcement activity, such as bank levies and payment plans, also relates to those two categories, even though the state's own enforcement records do not confirm this directly. Future public records requests focused specifically on enforcement activity by tax type could help close this gap.
The Gross Income Tax and the Pass-Through Business Alternative Income Tax together made up roughly 44% of New Jersey's total projected tax revenue for fiscal year 2026, according to the Office of Legislative Services. The Gross Income Tax alone accounts for about 37% of total state tax collections, making it New Jersey's single largest revenue source.
New Jersey's Sales and Use Tax generated a revised $13.75 billion in fiscal year 2025 and is projected to reach $14.46 billion in fiscal year 2026, according to Treasury and Office of Legislative Services estimates. Census Bureau data covering the calendar year 2024 shows general sales and gross receipts tax collections of $14.9 billion.
New Jersey's corporation business tax has a graduated rate structure ranging from 6.5% to 9% of the entire net income, depending on income level. Corporations with New Jersey allocated net income above $10 million also owe a separate 2.5% corporate transit fee, making New Jersey's top combined corporate rate among the highest in the country.
New Jersey's corporation business tax collections fell short of forecasts in April 2025, declining 18% from the prior year, largely due to a sharp increase in corporations applying prior and current net operating losses. The Office of Legislative Services attributed much of this to a 2023 reform package that allowed unitary corporate groups to pool losses across all members.
No, New Jersey applies a single statewide sales and use tax rate of 6.625% with no additional county or municipal sales taxes layered on top. The main exception is the Urban Enterprise Zone program, which allows certified businesses in 32 designated municipalities to charge a reduced rate of 3.3125% on qualifying in-person retail sales.
New Jersey relies more heavily on individual income tax than the national average, a pattern the Tax Foundation attributes to its highly progressive rate structure, which ranges from 1.4% to 10.75%. New Jersey also has the highest top marginal corporate income tax rate in the country at 11.5%, though business taxes make up a smaller share of total state revenue than income or sales tax.
Official data is available from the New Jersey Department of the Treasury's revenue reports, the Office of Legislative Services' Tax and Revenue Outlook, and the U.S. Census Bureau's Annual Survey of State Government Tax Collections, which is also accessible through the Federal Reserve Bank of St. Louis's FRED economic data platform for New Jersey specifically.
Fiscal year figures for individual tax categories, including the Gross Income Tax, Sales and Use Tax, Corporation Business Tax, and Corporate Transit Fee, come from the New Jersey Office of Legislative Services' Tax and Revenue Outlook for Fiscal Year 2025-2026, published in April 2025, which itself compiles figures from the New Jersey Department of the Treasury.
Calendar-year sales and gross receipts tax figures reference the U.S. Census Bureau's Annual Survey of State Government Tax Collections. Sales tax rate and Urban Enterprise Zone information come directly from the New Jersey Division of Taxation. Corporate rate rankings and comparative state tax structure data reference the Tax Foundation's published analysis of New Jersey tax rates and collections, which itself relies on Census Bureau source data.
New Jersey fiscal years run from July 1 through June 30. Figures for FY 2025 and FY 2026 referenced above represent the Executive Branch's revised and projected estimates as of April 2025 and are subject to further revision as actual collections come in throughout each fiscal year.