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The New Jersey Administrative Code at N.J.A.C. 18:35-5.2 requires income taxation on the composite New Jersey nonresident gross income tax returns (Form NJ-1080C) at the highest rate. However, for tax years beginning on or before 12/31/12, the Division will continue to allow 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 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.

As a result of the review of the Composite Return policy, the regulation at N.J.A.C. 18:35-5.2 will be enforced for tax years beginning on and after January 1, 2013. Thus, all entity members who elect to participate in the composite return filing will be required to pay tax at the highest rate.

Participation in a composite return is elective. If the nonresident individual does not believe that the benefits derived from the composite return outweigh the additional tax paid, they can file an individual nonresident return (Form NJ-1040NR).

As a result of the enforcement of the regulation, some filing entities may receive a Notice for failure to make the required estimated payments. If the filing entity believes the correct estimated payments were remitted using the two tiered tax rate calculation, please contact the Division at:

New Jersey Division of Taxation
ITAB Composite Return
P.O. Box 288
Trenton, NJ 08646-0288
Last Updated: Wednesday, 08/20/14

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