NJ New Budget Decreases S-Corp Minimum Tax

July 6th, 2011

On June 30th, 2011, New Jersey Governor Chris Christie signed into law portions of the legislature’s New Jersey budget that included a 25% decrease for the minimum corporate business tax on S-corporations. The new rates are as follows:

Gross Receipts               Minimum Tax

$1 million or more         $1,500

$500,000-$999,999       $1,125

$250,000-$499,999       $750

$100,000-249,999         $562.50

Less than $100,000       $375

The only exception to the decrease will be S-corporations which are members of affiliated or controlled groups with payrolls of $5,000,000 or more. Their minimum tax remains at $2,000.

This last exclusion from the new minimum corporate tax law seems to unfairly discriminate against staffing agencies and service corporations, as their primary expense is payroll. In fact, payroll IS the product being sold. Typically staffing agencies  have controlled groups and reach the $5,000,000 threshold. Yet, solely due to their line of business, they will not benefit from the new reduction.

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