For a seventh straight year, New Jersey ranks last in the region in cost competitiveness and business taxes, according to New Jersey Business & Industry Association’s 2025 Regional Business Climate Analysis that was released Thursday.
The analysis shows New Jersey as a regional outlier with the top corporate tax rate, highest maximum unemployment insurance tax contribution per employee, and the highest property tax paid as a percentage of personal income in the region.
State rates in each category are scored from 1 (least competitive) to 7 (most competitive). New Jersey’s overall business climate score was 10 points, making it the least competitive state.
New Jersey also had the second-highest top income tax rate and combined state sales tax rate.
Each year, NJBIA scores six individual business cost categories that measure business competitiveness in seven states. The other states in the region are Connecticut, Delaware, Maryland, New York, and Pennsylvania.
“These results are perhaps more disappointing as New Jersey abandoned its decision to improve upon its highest-in-the-nation corporate business tax rate in 2024,” said NJBIA President and CEO Michele Siekerka. “Other states are well ahead of us with their corporate tax rates, while others continue to lower them, understanding that corporate tax rates affect regional competitiveness.”
New Jersey’s top corporate rate is measured at 11.5%, following Gov. Phil Murphy’s reversal to sunset a temporary 2.5% surtax on the state’s largest employers.
Delaware’s 8.70% top corporate rate is the second-highest rate in the region, but the First State also has a 0% combined sales tax rate and the region’s lowest property tax rate of 1.92%.
“These results are another unfortunate reminder of the very serious affordability and regional competitiveness challenges our job creators face in New Jersey, year in and year out,” said NJBIA Vice President of Government Affairs Elissa Frank, who prepared the analysis. “Until we at least try to either individually or comprehensively reduce our high business cost-drivers, New Jersey will struggle to compete nationally and regionally with other states.”
Pennsylvania took the top spot in the region with 35 points, making it the most competitive.
Compared with the six other states, New Jersey has the top property taxes paid as a percentage of income at 4.81%.
In the study, unemployment insurance taxes are represented by the maximum UI contribution per employee, which is calculated by multiplying each state’s taxable wage base and maximum tax rate. With this metric, New Jersey is the highest in this category with a $2,771.20 maximum UI contribution per employee.
