Does New Jersey Have a Franchise Tax for LLCs?
No. New Jersey does not impose a franchise tax on limited liability companies. LLCs are not subject to a franchise tax, gross receipts tax, or entity-level levy. Instead, income passes through to members and is taxed on individual returns under New Jersey's Gross Income Tax at graduated rates up to 10.75% for residents under N.J.S.A. 54A:1-1 et seq.
What Taxes Apply to New Jersey LLCs?
Pass-Through Income Tax
LLC members report their allocable share of business income on personal tax returns. Resident members pay graduated income tax rates up to 10.75%. Nonresident members may face New Jersey withholding or composite-tax obligations depending on ownership percentage and income allocation.
Sales Tax
If your LLC sells taxable goods or services, you must register for New Jersey's 6.625% sales tax and collect it from customers. Register at https://www.nj.gov/treasury/revenue/gettingregistered.shtml.
Self-Employment Tax
Members owe federal self-employment tax on net business income. Quarterly estimated tax payments are due April 15, June 15, September 15, and January 15.
Annual Report Filing
File your LLC's annual report by the last day of your formation-month anniversary each year (N.J.S.A. 42:2C-26). The filing fee is $75. Failure to file results in penalties and potential administrative dissolution.
Federal Tax Elections
Your LLC's federal classification affects reporting:
- Single-member LLCs default to disregarded-entity status (Schedule C).
- Multi-member LLCs default to partnership treatment (Form 1065).
You may elect S-corp or C-corp status by filing Form 2553 or Form 8832 with the IRS. An S-corp election can reduce self-employment tax on distributions. A C-corp election enables income deferral or reinvestment strategies.
Next Steps
Contact the New Jersey Division of Taxation at https://www.nj.gov/treasury/taxation/ for guidance on your LLC's specific tax obligations. A tax professional can confirm whether a federal tax election reduces your overall burden and ensure compliance with quarterly estimated-tax deadlines and annual filing requirements.
This is general information, not legal advice.