Yes, New Jersey has a state income tax, and it applies to most residents and workers

New Jersey taxes income earned by residents and non-residents who work in the state. The tax is progressive, meaning the rate increases as your income rises. For the 2024 tax year, rates range from 1.4% on the lowest brackets to 10.75% on income over $5 million. You file your state return using Form NJ-1040 if you lived in New Jersey for any part of the tax year or earned income there.

The state also taxes capital gains, retirement income, and business profits. If you're self-employed or own a business, you'll owe state income tax on your net profit. Certain types of income—like Social Security benefits and some pension income—may be partially or fully exempt, depending on your age and total income.

Key Takeaways

  • New Jersey income tax rates range from 1.4% to 10.75% depending on your income level, with higher earners paying the top rate.
  • You must file a New Jersey return if you lived in the state for any part of the year or earned income there, even if you don't owe tax.
  • Social Security benefits are fully exempt from New Jersey income tax for all residents.
  • Pension and retirement income has different rules depending on your age and when you earned it, so check whether your specific income qualifies for an exemption.
  • The state offers credits for property taxes, earned income, and dependent care that can reduce what you owe.

How New Jersey income tax brackets work

New Jersey uses tax brackets that change each year. The state publishes updated brackets in January for that tax year. For 2024, a single filer with income between $0 and $20,000 pays 1.4%, while someone earning between $20,000 and $35,000 pays 1.75%. The brackets continue to climb, reaching 10.75% for income over $5 million.

You only pay the higher rate on income that falls into that bracket, not on your entire income. For example, if you're single and earn $50,000, you don't pay 5.525% on all of it—you pay 1.4% on the first $20,000, 1.75% on the next $15,000, and so on. The New Jersey Division of Taxation publishes a tax table each year showing exactly what you owe at different income levels.

Who must file a New Jersey return

You must file if you lived in New Jersey for any part of the tax year and your income exceeds the filing threshold. For 2024, the threshold is $10,000 for single filers and $20,000 for married couples filing jointly. If your income is below the threshold, you generally don't have to file, but you may want to if you had taxes withheld—filing gets you a refund.

Non-residents who earned income in New Jersey must also file, even if they lived elsewhere. This includes people who worked in New Jersey but lived in another state. You file using Form NJ-1040-NR (Non-Resident). If you moved to or from New Jersey during the year, you're considered a resident for that year and must file the resident form.

Income that is exempt or partially exempt from New Jersey tax

Social Security benefits are completely exempt from New Jersey income tax. This applies to all residents, regardless of age or income level. Supplemental Security Income (SSI) is also fully exempt.

Pension and retirement income has more complex rules. If you're 62 or older and receive a pension from a New Jersey public employee system, military service, or certain other sources, you may be able to exclude part or all of it. The exclusion phases out as your total income rises. If you're under 62, pension income is generally taxable unless it comes from a military or disability source.

Income from IRAs and 401(k)s is taxable when you withdraw it, unless you may have access to for an age-based exemption. Distributions from a Roth IRA are not taxable. Unemployment benefits are also taxable in New Jersey.

Tax credits that reduce what you owe

New Jersey offers several credits that lower your tax bill. The Property Tax Reimbursement Credit refunds part of the property tax you paid if your income is below a certain level—the income limit and credit amount change each year. You claim this on your return if you own or rent your home in New Jersey.

The Earned Income Tax Credit (EITC) is available to low- and moderate-income workers. New Jersey's credit is in addition to the federal EITC. If you have dependent children or are a childless worker, you may may have access to. The credit amount depends on your income and family size.

The Dependent Care Credit helps if you paid for childcare or adult care so you could work. You can claim up to 30% of may have access to expenses, up to a maximum credit amount that varies by year. Other credits exist for education expenses, adoption, and residential energy improvements—check the Division of Taxation website to see which ones explore to your situation.

How to file your New Jersey return

You can file online using approved tax software, by mail, or through a tax professional. The state recommends e-filing because it's faster and reduces errors. If you file by mail, send your completed Form NJ-1040 and any supporting documents to the address listed in the tax instructions. The important date is typically April 15, the same as the federal important date, though you can request an extension.

If you owe money, you can pay online through the Division of Taxation website, by mail with a check, or through an approved payment processor. If you're due a refund, e-filing usually gets it to you faster than mailing a paper return. The state processes refunds within 4 to 6 weeks for e-filed returns and longer for paper returns.

Deductions and standard deduction amounts

New Jersey allows you to claim either the standard deduction or itemize deductions, just like the federal return. For 2024, the standard deduction is $10,000 for single filers and $20,000 for married couples filing jointly. These amounts increase slightly each year with inflation.

If you itemize, you can deduct mortgage interest, property taxes, charitable contributions, and certain other expenses. However, New Jersey limits the deduction for property taxes to $10,000 per year, which matches the federal limit. Keep receipts and documentation for any deductions you claim, and be ready to provide them if the state requests them.

Frequently Asked Questions

Do I have to pay New Jersey income tax if I work there but live in another state?

Yes. Non-residents who earn income in New Jersey owe state income tax on that income. You file Form NJ-1040-NR and pay tax on wages, self-employment income, and other earnings from New Jersey sources. Some states offer credits for taxes paid to other states, so check your home state's rules to avoid double taxation.

Is Social Security taxable in New Jersey?

No. Social Security benefits are completely exempt from New Jersey income tax for all residents, regardless of age or total income. This is one of the few income sources with a blanket exemption.

What happens if I don't file a New Jersey return when I'm supposed to?

The state may assess penalties and interest on any unpaid tax. If you owe a refund, you lose it after a certain period. If you missed the important date, file as soon as you can. The Division of Taxation can explain any penalties owed and may be able to reduce them if you have a reasonable cause.

Can I claim a dependent on my New Jersey return if I claim them on my federal return?

Yes. New Jersey generally follows federal rules for dependents. If you claim a dependent on your federal Form 1040, you can claim them on your New Jersey return too. The dependent must meet the same relationship, residency, and income requirements.

How do I know if my pension is exempt from New Jersey tax?

It depends on the source of the pension and your age. Military pensions and disability pensions are generally exempt. Public employee pensions may be partially exempt if you're 62 or older. Contact the Division of Taxation or your pension provider to confirm whether your specific pension qualifies for an exemption.