New Jersey tax guide
New Jersey's tax system is designed with seven progressive brackets, placing a higher tax burden on high-income earners while utilizing a broad range of exemptions for lower-income households. As one of the highest-tax states in the U.S., the impact on monthly take-home pay is notable for most earners. The absence of local income taxes provides some relief, though residents must balance this against the state's substantial property tax requirements.
Key tax highlights
Payroll
- New Jersey personal income tax rates are graduated, ranging from 1.4% to 10.75% based on taxable income levels.
- The 10.75% top marginal tax rate applies to individuals with taxable income exceeding $1,000,000.
- Employers are required to withhold New Jersey state income tax from employee paychecks based on the state's specific withholding tables.
- Supplemental wages, such as bonuses, are subject to mandatory state income tax withholding.
Local taxes
- Unlike many other states, New Jersey does not impose local or municipal income taxes on residents.
- While there is no local income tax, property taxes in New Jersey are among the highest in the nation and are managed at the local level.
Deductions
- New Jersey allows for a personal exemption of $1,000 for taxpayers and their dependents.
- The New Jersey Earned Income Tax Credit (NJEITC) provides tax relief to eligible low-to-moderate-income working families, often calculated as a percentage of the federal credit.
- Residents may be eligible for the Property Tax Deduction or Credit, which allows them to reduce their state taxable income or receive a refundable credit based on property taxes paid.
Salary examples
Pre-computed take-home estimates at common salary levels. For example, a $75,000 salary in New Jersey yields about $58,939 after all deductions (78.6% take-home rate). Use the calculator above with your actual salary to see your specific estimate.
| Salary | Federal | State | FICA | Take-Home | Rate |
|---|---|---|---|---|---|
| $50,000 | $3,820 | $1,271 | $3,825 | $41,085 | 82.2% |
| $75,000 | $7,670 | $2,653 | $5,738 | $58,939 | 78.6% |
| $100,000 | $13,170 | $4,246 | $7,650 | $74,934 | 74.9% |
| $150,000 | $24,734 | $7,431 | $11,475 | $106,361 | 70.9% |
Neighboring states
How New Jersey compares with border states on income tax. At a $75,000 salary, a New Jersey worker pays $2,653 in state tax annually.
| State | Tax type | Top rate |
|---|---|---|
| Pennsylvania | flat tax | 3.07% |
| Delaware | progressive | 6.60% |
| New York | high tax | 10.90% |
Tax tips for New Jersey
- Confirm that your employer is withholding the correct amount for state taxes by reviewing the current New Jersey withholding tables.
- Evaluate your eligibility for the New Jersey Property Tax Deduction versus the Property Tax Credit to see which offers a greater reduction in your state liability.
- If you are a low-to-moderate-income worker, verify your eligibility for the New Jersey Earned Income Tax Credit to boost your annual tax refund.
- Ensure you accurately report all forms of supplemental income, as bonuses are taxed at specific state rates.
Did you know?
- •New Jersey is one of the few states that does not levy a local income tax, setting it apart from its neighbor, New York, where city-specific taxes are common.
- •The state government uses a progressive tax structure that specifically targets high-earners, with the top 10.75% rate only introduced in recent years for income over $1 million.
Filing guidance
New Jersey residents must file Form NJ-1040 to report state income and claim applicable credits. Filing is mandatory for anyone with income exceeding the personal exemption threshold, even if no tax is owed after credits. Residents should utilize the state's Division of Taxation online portal to track returns and access specific schedules for the Property Tax Deduction or NJ-EITC. Given the high-tax nature of the state, meticulous record-keeping regarding property taxes and dependent exemptions is essential for optimizing your annual filing.
Relocation context
Comparing New Jersey with nearby states can reveal whether paycheck differences are driven by state tax, local tax, or payroll deductions.