New Jersey imposes the highest corporate tax rate at 11.5 percent, followed by Pennsylvania (9.99 percent) and Iowa and Minnesota (both at 9.8 percent). Phil Murphy's famous quote, if corporate taxes really are your problem, you'll always have South Dakota and Wyoming, the only states that don't charge corporate income tax. Note that while LLCs are classified for tax purposes as corporations (or, for single-member LLCs, entities not considered), it is possible to choose to have your LLC classified as a corporation. Note that the final month of the accounting period for federal returns and New Jersey returns must be the same; however, the tax return year in the return title for federal and state returns may differ.
Instead, business revenues are distributed to individual LLC members, who then pay federal and state taxes on the amount distributed to them. Corporate rates, which in most cases are fixed regardless of the amount of income, generally range from about 4% to 10%. For comparison, keep in mind that for the past half-dozen years, New Jersey taxes personal income at marginal rates ranging from 1.40% to 8.97%. Rather, the taxable income of an S corporation is transferred to individual shareholders, and each individual shareholder is subject to federal taxes on his or her share of the corporation's income.
New Jersey imposes the highest corporate tax rate in the country at 11.5%, according to a new report released Tuesday by the Tax Foundation. Credits against the surcharge obligation shall not be allowed, except for credits for installment payments, estimated payments made with a request for extension to file a return, or overpayments from previous privilege periods. Of the 44 states that charge corporate income tax, North Carolina's 2.5% flat rate is the lowest, followed by Missouri and Oklahoma (both flat rates of 4.5%), according to the Tax Foundation report. The rules for the taxation of multi-state enterprises, including what constitutes a nexus with a state for multi-tax purposes, are complicated.
In addition, five of those states (Nevada, South Dakota, Texas, Washington and Wyoming), as well as Alaska and Florida, currently have no personal income taxes. The CBT also applies to New Jersey S corporations that are subject to federal taxes (due, for example, to built-in profits, excessive passive income, or passive investment income). It will also receive a digital edition of the New Jersey business magazine earlier this month. Currently, six states (Nevada, Ohio, South Dakota, Texas, Washington and Wyoming) do not have corporate income tax.
Instead, the company's revenues are distributed to individual partners, who then pay federal and state taxes on the amount distributed to them.