Listen to this articleThe basics:
- August tax revenue rose 6.8% to $2.8B, but business taxes fell sharply
- Corporate Business Tax dropped 258% as refunds surged
- BAIT revenue declined 23% in August and 36% year-to-date
- NJ Chamber warns falling business taxes threaten state finances
The state’s August revenue numbers are raising concerns from New Jersey business leaders.
The Treasury Department reported Sept. 15 that August revenue collections for major taxes totaled $2.8 billion — up $177.8 million (6.8%) over last year.
Treasury attributed more than half of the month’s growth was to the gross income tax ($1.3 billion; up $108.8 million – 9.5%); while sales and use tax ($1.162 billion; up $46.2 million – 4.1%) and casino revenues ($72.2 million; up $21.7 million – 43.1%) posted gains. Year-to-date, total revenues collections ($3.3 billion) are up $43.3 million – or 1.3% over the same period last fiscal year.
However, the corporate business tax, the second largest general fund revenue source, came in at negative $38 million in August – down $61.9 million (258.6%) from last year. Treasury said this was mainly due to significantly higher refunds. Fiscal year-to-date, CBT collections ($109.1 million) are down $132.3 million (54.8%).
That led to a warning from Tom Bracken, president and CEO of the New Jersey Chamber of Commerce, in a Sept. 17 post.
Bells are ringing
“New Jersey’s August 2025 tax revenue numbers should be setting off alarm bells in Trenton,” Bracken wrote. “While some may dismiss weak early-year returns as insignificant, the scale of the decline in business taxes cannot be ignored.
“These numbers are not just a statistical blip – they are a warning sign that the state’s economic engine is stalling, and that business growth must become a central priority for policymakers.”
These numbers are not just a statistical blip – they are a warning sign that the state’s economic engine is stalling, and that business growth must become a central priority for policymakers.
— Tom Bracken, president and CEO, New Jersey Chamber of Commerce
Bracken also noted that the business alternative income tax (BAIT) fell sharply — from $20.9 million in August 2024 to $16.1 million this August, marking a 23.1% decline.
“Taken together, these two business taxes – which form the backbone of the state’s revenue base – are down 282% year-over-year for August,” said Bracken. “In the current fiscal year, which began in July the picture is equally trouble. Through the first two months of FY 2026, the CBT has fallen 54.8%, from $241.4 million last year to just $109 million this year.
“The BAIT is off 36% year-to-date. Combined, these business taxes have cratered 91% compared with the same period in FY 2025.”
Bracken continued, “Contrast this with broader revenue growth: total major revenues in the overall state budget are up just 1.3% year-to-date, compared with a far healthier 8.3% increase at this point last year. That comparison underscores how dramatically business tax revenues are weighing down the state’s overall fiscal position.”
September supplements
The Treasury Department responded to NJBIZ’s inquiry about the concerns from the business community.
“As noted in the monthly press release, revenue collections in July and August are relatively small, without any major quarterly payment due dates,” a Treasury spokesperson told NJBIZ. “Corporation Business Tax collections in September can often be up to five times greater than the first two months of the fiscal year combined, since the third quarter payments for Tax Year 2025 are due in mid-September.
“The increase in CBT refunds is not attributable to the current economic climate. Rather, throughout the year taxpayers will file amended returns to claim economic development tax credits for prior tax years. The jump in refunds is attributable to such activity and reflects tax credit activity related to Tax Years 2018-2023, not Tax Years 2024 or 2025.”
The Treasury spokesperson also noted that Pass-Through Business Alternative Income Tax (PTBAIT) has also seen an uptick in refunds during the fiscal year, which the agency says is likely to due to timing and not indicative of any trend.
“PTBAIT collections in September can be 10 times greater than during the two months combined,” Treasury said. “Some of the major economic forecasting firms are now forecasting downward trends in quarterly corporate profits of 5%-10% into next year compared to their previous forecasts in June, due to federal and international conditions – and that is something we are keeping an eye on.”
Not an anomaly; a call to action
In his piece, Bracken pushed back on the argument that the early months of the fiscal year are less meaningful because of the larger September collections.
“But this explanation rings hollow when considering that CBT and BAIT actually improved from 2023 to 2024 in the same reporting window – instead of plummeting as they did this year,” Bracken stressed. “This trend is not ‘normal volatility’ but a sharp reversal.”
Bracken said that the fiscal and economic implications are clear.
“If New Jersey’s business tax base continues to erode, future budgets will face growing pressure, forcing tough choices on spending, borrowing, or further tax increases that could worsen competitiveness,” said Bracken. “State leaders must view this not as an anomaly but as a call to action.”
For both today’s and tomorrow’s policymakers, Bracken emphasized that New Jersey’s economy and business climate must be the top focus.
“Without sustained business growth, the state’s fiscal foundation is at risk,” said Bracken. “The warning signs are flashing now – and ignoring them could prove costly.”
