Insights

As a small business owner in Pennsylvania, New Jersey, or New York, you know how crucial it is to stay on top of local and state tax laws. With ever-evolving tax codes, it can be difficult to keep up with the changes that impact your bottom line. However, understanding these tax regulations is essential to maintaining your profitability and staying compliant. Whether you're running a storefront, an online business, or a consulting firm, these upcoming tax updates for 2025 in the tri-state area could directly affect your business.

Here’s what every small business owner in PA, NJ, and NY needs to know to stay ahead of the curve in 2025.

1. New Jersey’s Increased Sales Tax on Certain Services

In 2025, New Jersey is set to expand its sales tax to cover more services that were previously exempt. This includes services such as interior design, marketing, and certain types of consulting. While the exact list of services is still being finalized, small business owners in New Jersey should prepare for possible changes in how services are taxed.

What You Need to Do: If your business provides professional services, make sure to review the updated sales tax regulations to ensure you're compliant. Work with a tax advisor to adjust your billing practices and sales tax filings accordingly.

2. Pennsylvania’s New Pass-Through Entity Tax (PTE) Expansion

In Pennsylvania, the Pass-Through Entity Tax (PTE) is expanding, and more business owners will be impacted by these changes in 2025. The PTE allows owners of pass-through entities (LLCs, S Corporations, partnerships) to pay taxes at the entity level, which can help avoid the state's personal income tax on the business's income. However, the eligibility and structure of the tax could change.

What You Need to Do: If you’re a pass-through entity in Pennsylvania, consult with your accountant about whether the PTE will be beneficial for your business in 2025. Keep track of any new rules or changes to the program that could affect your business’s tax strategy.

3. Changes to New York’s MCTD (Metropolitan Commuter Transportation District) Tax

For businesses operating in New York City and its surrounding metropolitan areas, New York’s MCTD tax is something to watch closely in 2025. This tax is applied to wages earned in the MCTD, and while it mostly affects employees, business owners who pay wages to workers in this area should ensure they are withholding the proper amounts.

What You Need to Do: If you have employees working in the MCTD, ensure that payroll systems are updated to reflect the new MCTD rates for 2025. If you’re unsure whether your business is impacted, speak with a tax professional who can guide you through the specifics of this tax.

4. New York State’s Potential Minimum Wage Hike

New York State has gradually been increasing the minimum wage, with some areas, like New York City, already at $15 per hour or more. In 2025, the state may increase the minimum wage further, especially for businesses in regions outside New York City. If this happens, you’ll need to adjust your payroll to account for the change.

What You Need to Do: Check for any updates regarding the minimum wage increase in your area. Update your payroll processes and ensure compliance with new wage laws to avoid penalties. Additionally, reassess your budget to account for the possible increase in labor costs.

5. Sales Tax on Online Purchases in New Jersey

In recent years, New Jersey has made it clear that they are focusing on e-commerce sales tax collection. If you sell goods online and ship to New Jersey customers, be prepared for potential changes to how e-commerce transactions are taxed in 2025. New Jersey may introduce more stringent tax rules for online businesses, especially those with remote workers or cross-border sales.

What You Need to Do: If you operate an online business, ensure you're collecting and remitting the correct sales tax for New Jersey residents. Use sales tax automation software to track different states’ rules to stay compliant.

6. New York’s Digital Ad Tax: What You Need to Know

New York City has been considering implementing a Digital Advertising Tax on businesses that engage in online advertising. While this has not yet been enacted, the city could introduce this tax in 2025. The tax would apply to digital ads displayed within New York City, impacting businesses that run ads on Google, Facebook, or other digital platforms.

What You Need to Do: If your business spends on digital advertising in New York City, track your expenses and be prepared for potential taxation. This could lead to additional costs, so stay informed about this potential tax and be ready to adjust your ad budget if it comes into effect.

7. New Jersey’s Increased Corporate Business Tax (CBT)

New Jersey has already increased its Corporate Business Tax (CBT) in recent years, and further changes may be coming in 2025. Small business owners in New Jersey should expect possible adjustments to the CBT rates, which could impact both corporations and LLCs.

What You Need to Do: Keep an eye on New Jersey's corporate tax updates, and ensure you’re calculating your tax liabilities correctly. Work with a local accountant to optimize your tax strategy, including whether the CBT applies to your specific business structure.

8. Expanded Paid Family Leave in New York

Starting in 2025, New York’s Paid Family Leave (PFL) program may see expanded benefits, including increased paid leave and longer leave periods for workers. This is a great benefit for employees but can also be a challenge for small business owners who must comply with the new regulations.

What You Need to Do: Ensure your business complies with any new regulations surrounding Paid Family Leave. Review your business's policies on employee benefits and adjust your payroll and insurance contributions to reflect the changes in PFL for 2025.

9. R&D Tax Credit Expansion in New Jersey

New Jersey is known for its Research & Development (R&D) Tax Credit, which allows businesses to receive credits for qualifying research expenditures. In 2025, there are discussions around expanding this credit to encourage more innovation among small businesses.

What You Need to Do: If your business is involved in R&D, make sure you're taking full advantage of the tax credits available. Work with an accountant to track eligible activities and ensure your company maximizes any R&D credits in 2025.

10. Changes to New Jersey’s Property Tax Breaks

For small businesses that own real estate, New Jersey has various property tax incentives, including breaks for certain types of real estate improvements. These incentives may change in 2025, with possible expansions or reductions to qualifying businesses.

What You Need to Do: If you own property or are considering purchasing commercial real estate, stay updated on potential property tax breaks. Consider consulting a tax professional to take full advantage of any property tax incentives your business may qualify for in 2025.

Final Thoughts: Stay Ahead of Tax Changes in 2025

Taxes can be a headache for small business owners, especially when juggling multiple state and local tax requirements. However, understanding the potential changes to tax laws in Pennsylvania, New Jersey, and New York for 2025 is crucial to ensuring your business stays compliant and profitable.

By staying informed, updating your tax strategies, and working with a knowledgeable tax advisor, you can navigate these changes with confidence and reduce your tax liability. As always, planning ahead is the best way to make sure your business is ready for whatever 2025 brings.

Need help navigating the upcoming tax changes in PA, NJ, and NY? Reach out to us to ensure your business stays ahead of the curve.