A composite return is a group filing. Technically, it is an individual return that each nonresident income earner must file, except that it is a composite filing of all the individual returns on one form.
New Jersey has a graduated Income Tax rate, which means the State imposes a higher tax rate the higher the income. Since a composite return is a combination of various individuals, various rates cannot be assessed. Therefore, the composite return, Form NJ-1080C, uses the highest tax bracket of 10.75%. (See N.J.A.C. 18:35-5.2.)
Note: For tax year 2017, the highest tax rate was 8.97%.
Participation in a composite return is elective. If the nonresident individual is going to be taxed at a higher rate than his/her financial circumstances would require if he/she filed individually, the individual can file a nonresident return (Form NJ-1040NR 1.1 mb).
For more information, see the instructions for the New Jersey Composite Return (Form NJ-1080C) or the New Jersey Nonresident Return (Form NJ-1040NR).