The New Jersey Administrative Code at N.J.A.C. 18:35-5.2 requires income taxation on composite returns, (Form NJ-1080C) at the highest rate. For tax years beginning on or before 12/31/12 the Division will continue to allowing the use of two rates in order to encourage nonresident individuals to elect to participate in a composite return.
Entities preparing and filing the NJ-1080C return for participating taxpayers with New Jersey sourced income from the entity of less than $250,000 will apply the 6.37% rate and for participating taxpayers with New Jersey sourced income of $250,000 or more will apply the highest tax rate which was 10.75% in 2009 and 8.97% in 2010, 2011 & 2012.
The Division is reviewing its composite return policy which may result in a revision for tax years beginning on and after January 1, 2013. Any prospective change in policy will be posted on the Division’s website.