Pennsylvania, New Jersey, and New York introduced significant tax changes in 2025, impacting businesses and individuals. These updates include corporate tax reductions, new tax credits, and adjustments to transportation-related taxes.
Pennsylvania’s Tax Adjustments for 2025
Pennsylvania is moving forward with its planned corporate tax reductions, lowering the corporate income tax rate to 7.99% as of January 1, 2025. This marks a decrease from 8.49% in 2024 and a notable drop from the original 9.99%. The state remains committed to further reductions, aiming for a 4.99% rate by 2031.
On July 11, 2024, Governor Josh Shapiro signed a tax bill (S.B. 654) that increases Pennsylvania’s net operating loss (NOL) deduction. The NOL deduction will gradually rise from the current 40% cap to 80% of corporate taxable income by 2029. The increase will occur in stages: 40% for 2025, 50% for 2026, 60% for 2027, 70% for 2028, and 80% for 2029 and beyond. Losses carried forward from prior years will be subject to a phased calculation. A net loss incurred during a tax year beginning prior to January 1, 2025, is capped at 40%. A net loss incurred in a tax year beginning on or after January 1, 2025, is calculated by deducting the applicable percentage for the tax year specified above minus “the actual percentage of taxable income deducted” above, multiplied by taxable income for the tax year.
Other Pennsylvania Tax Updates:
- Income Tax: The withholding rate remains unchanged at 3.07% for 2025.
- Unemployment Tax: The employee contribution rate stays at 0.07%, with no wage cap for employees, while employers’ taxable wage base remains at $10,000.
- Philadelphia Wage Tax: The wage tax will remain at 3.75% for residents and 3.44% for nonresidents in 2025.
- 1099-MISC/NEC Withholding: Pennsylvania mandates withholding for non-employee compensation paid to non-residents and lease payments. Lessees of Pennsylvania real estate who make “lease payments” to non-resident lessors during a trade or business must withhold personal income tax on annual payments of $5,000 or more.
- Local Taxes: Act 32 continues to standardize local earned income tax (EIT) collection across municipalities.
- Corporate Tax: The corporate tax rate decreased from 8.49% to 7.99% on January 1, 2025.
New Jersey’s Tax Modifications in 2025
New Jersey launched multiple tax initiatives aimed at economic development and financial relief for residents. The new Next New Jersey Program provides up to $500 million in tax credits to businesses investing at least $100 million in artificial intelligence infrastructure. Another program, StayNJ, helps seniors by reducing their property taxes by up to 50%, with a cap of $6,500.
Other Key New Jersey Tax Changes:
- Minimum Wage: The state minimum wage rises to $15.49 per hour in 2025.
- Income Tax: The graduated tax rate for 2025 will range from 1.5% to 11.8%, with the highest rate for individuals earning over $1 million.
- Unemployment Tax: In 2025, the wage base for employers and employees will be calculated separately. For employers, the wage base for unemployment insurance, disability insurance, and workforce development will increase to $43,300. Employees will also see an increase in the wage base for unemployment insurance and workforce development to $43,300, with a maximum withholding of $184.03. The wage base for employee disability insurance and family leave will rise to $165,400, with a maximum withholding of $926.24. Additionally, the base week amount will increase to $303. From January 1 to December 31, 2025, employee contributions will be allocated as follows: unemployment insurance at 0.3825%, disability insurance at 0.2300%, family leave insurance at 0.3300%, and workforce development at 0.0425%, for a total contribution rate of 0.9850%.
- Paid Sick Leave: Most employers must provide one hour of sick leave for every 30 hours worked, up to 40 hours per year.
- Electronic Funds Transfers (EFT): Businesses with a tax liability of $10,000 or more in the previous year must make future tax payments via EFT.
- W-2 and 1099 Filing: New Jersey now mandates electronic submission of Forms W-2, W-2-G, 1099s, and 1094/1095s.
- Gas Tax: New Jersey raised its gas tax rate by 2.6 cents per gallon, increasing the tax on gasoline from 31.8 cents to 34.4 cents per gallon and on diesel fuel from 35.8 cents to 38.4 cents per gallon. Combined with the Motor Fuels Tax, the total tax rate for gasoline paid by everyday motorists is 44.9 cents per gallon.
New York’s 2025 Tax Adjustments
New York’s major tax update is congestion pricing in Manhattan’s central business district. As of January 5, 2025, vehicles entering the area south of 60th Street will be charged a $9 toll. The toll will increase over the next several years, reaching $12 in 2028 and $15 by 2031.
Toll costs vary based on vehicle type, time of day, E-ZPass usage, income level, frequency of travel, and disability status. Peak-hour rates apply from 5 a.m. to 9 p.m. on weekdays and 9 a.m. to 9 p.m. on weekends, while overnight tolls are 75% lower. Low-income drivers enrolled in the Low-Income Discount Plan receive a 50% discount after 10 trips per month during peak hours, provided their adjusted gross income is $50,000 or less. Additional discounts are available for individuals with disabilities and their caregivers.
New York motorists will see some relief as the state lowers its fuel tax to 16.5 cents per gallon in 2025, down from 17.3 cents in 2024.
As Pennsylvania, New Jersey, and New York implement new tax policies for 2025, businesses and individuals must stay informed about how these changes will impact their finances. Contact your Stephano Slack tax manager or partner at 610-687-1600 or TaxInfo@StephanoSlack.com for personalized guidance tailored to your unique situation.
Author Joshua Greenbaum, CPA, is a manager in Stephano Slack’s Marlton, NJ office, bringing extensive tax and audit expertise to his clients. Known for his collaborative approach, Josh works closely with individuals at every level, from business owners to bookkeepers. He simplifies complex financial issues, helping clients make informed decisions with confidence. Josh’s dedication to maximizing client benefits shines in times of uncertainty. With his expertise in navigating complex programs and strategies, Josh helps clients secure optimal outcomes even in challenging circumstances. He can be contacted at 856-489-0222 ext. 3415 or Jgreenbaum@Stephanoslack.com.
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