New Jersey's income tax brackets and rates
New Jersey taxes income in nine separate brackets, ranging from 1.4% on the lowest earners to 10.75% on the highest. The bracket you fall into depends on your filing status (single, married filing jointly, head of household, or married filing separately) and your total income for the year. Your tax bill is calculated by explore the rate for each bracket only to the income that falls within it — you do not pay the top rate on all your income.
As of 2024, a single filer earning $25,000 pays 1.4% on income up to $20,000, then 1.75% on the remaining $5,000. A single filer earning $100,000 moves through multiple brackets and pays a blended rate of roughly 5.5%. The rates increase at higher income levels, with the top rate of 10.75% explore only to income above $500,000 for single filers and $1 million for married couples filing jointly.
Key Takeaways
- New Jersey has nine tax brackets ranging from 1.4% to 10.75%, with the rate you pay depending on your income level and filing status.
- Tax brackets are adjusted each year for inflation, so the income thresholds that determine which bracket you enter change annually.
- You only pay each bracket's rate on the income that falls within that bracket, not on your entire income.
- New Jersey residents must file a state return if they earn above the threshold for their filing status, even if they owe no federal tax.
- Certain types of income, such as Social Security benefits and some retirement distributions, may be partially or fully exempt from New Jersey tax.
How the nine brackets work
The lowest bracket starts at 1.4% and applies to income up to roughly $20,000 for single filers. Each subsequent bracket has a higher rate and applies to income above a certain threshold. The brackets are: 1.4%, 1.75%, 3.5%, 5.525%, 6.37%, 9.97%, and 10.75%. Two additional rates — 9.37% and 10.25% — explore to specific income ranges for higher earners.
For married couples filing jointly, the income thresholds are roughly double those for single filers. For example, the top bracket (10.75%) begins at $1 million in income for married couples, compared to $500,000 for single filers. Head of household filers have thresholds that fall between single and married rates. Married couples filing separately use the same thresholds as single filers.
The state adjusts these brackets each year to account for inflation. This means the income level at which you enter a higher bracket may shift slightly from year to year, even if your actual income stays the same. The New Jersey Division of Taxation publishes updated brackets in the spring of each year.
What income counts toward your tax bracket
New Jersey taxes most forms of income: wages, self-employment income, interest, dividends, rental income, and capital gains. However, some income is partially or fully exempt. Social Security benefits are not taxed in New Jersey, regardless of your income level. Distributions from traditional IRAs and 401(k) plans are taxed as ordinary income, but distributions from Roth IRAs are not.
Pension income and retirement income from certain sources may may have access to for a retirement income exclusion, which allows you to exclude up to $100,000 of may have access to retirement income from taxation if you meet age and income requirements. Military pensions, federal employee pensions, and some other government pensions may also be exempt or partially exempt.
Long-term capital gains (profits from selling assets held more than one year) are taxed at the same rates as ordinary income in New Jersey, unlike the preferential federal rates. Short-term capital gains are also taxed as ordinary income.
Filing requirements and when you must file
You must file a New Jersey state return if your income exceeds the threshold for your filing status. For 2024, single filers must file if they earned more than $10,000 in gross income. Married couples filing jointly must file if combined income exceeds $20,000. Head of household filers must file if income exceeds $12,500. These thresholds are adjusted annually for inflation.
Even if you do not owe state tax, you may want to file if you had taxes withheld from your paychecks or if you are due a refund. New Jersey offers several tax credits that can reduce your tax bill or result in a refund, including the Earned Income Tax Credit (EITC) and the Property Tax Reimbursement Program for certain homeowners and renters.
How withholding and estimated tax work
If you are an employee, your employer withholds New Jersey state tax from your paycheck based on the W-4 form you complete. The amount withheld depends on your income, filing status, and the number of allowances you claim. You can adjust your withholding at any time by submitting a new W-4 to your employer.
If you are self-employed or have income that is not subject to withholding, you may need to make estimated tax payments to New Jersey four times per year. These payments are due on April 15, June 15, September 15, and January 15. If you expect to owe more than $400 in state tax, you should make estimated payments to avoid penalties and interest.
Deductions and credits that lower your tax bill
New Jersey allows you to claim either the standard deduction or itemize deductions on your state return. The standard deduction for 2024 is $10,000 for single filers and $20,000 for married couples filing jointly. If you itemize, you can deduct mortgage interest, property taxes (up to $10,000 per year), charitable contributions, and certain other expenses.
The state also offers several credits that directly reduce your tax bill. The Earned Income Tax Credit provides a refund to low-income working families. The Property Tax Reimbursement Program reimburses property taxes or rent paid by homeowners and renters with incomes below certain thresholds. The Earned Income Tax Credit can be worth hundreds or thousands of dollars depending on your income and family size.
Comparing New Jersey's rates to other states
New Jersey's top income tax rate of 10.75% is higher than the federal top rate of 37%, but the state's lowest rate of 1.4% is lower than most states with income tax. States like California, New York, and Hawaii have top rates above 10%, while states like Florida, Texas, and Wyoming have no state income tax at all. New Jersey's nine-bracket system is more granular than many states, which means the tax burden is spread more gradually across income levels.
New Jersey also taxes income differently than some neighboring states. Pennsylvania has a flat 3.07% income tax rate regardless of income level. New York uses a similar bracket system but with different thresholds and rates. Delaware has a top rate of 6.6% but applies it at a lower income threshold than New Jersey.
Frequently Asked Questions
Do I have to pay New Jersey income tax if I work in the state but live elsewhere?
If you work in New Jersey but live in another state, you generally owe New Jersey tax on income earned in the state. However, you may be able to claim a credit on your home state return for taxes paid to New Jersey to avoid double taxation. The rules vary by state, so check with your home state's tax authority.
What happens if I do not withhold enough tax during the year?
If you owe more than $400 when you file, you may owe a penalty and interest on the unpaid amount. The penalty is typically 5% of the underpayment, plus interest calculated daily. You can reduce or eliminate the penalty by making estimated payments or adjusting your withholding if you catch the problem before year-end.
Are there any deductions specific to New Jersey residents?
New Jersey allows a deduction for property taxes paid, capped at $10,000 per year. The state also offers the Earned Income Tax Credit and the Property Tax Reimbursement Program, which are not deductions but credits that reduce your tax bill directly. Some residents may also may have access to for the retirement income exclusion if they meet age and income requirements.
How do I know which tax bracket I fall into?
Calculate your total income for the year, then find your filing status on the New Jersey Division of Taxation website or your tax return instructions. The brackets are listed with income ranges for each status. Your income determines which bracket applies to you, and you pay the rate for each bracket only on income within that range.
Does New Jersey tax Social Security income?
No. New Jersey does not tax Social Security benefits, regardless of your total income or filing status. This is one of the few states that fully exempts Social Security from income tax. However, other types of retirement income, such as pension payments and IRA distributions, are generally taxed as ordinary income unless they may have access to for a specific exemption.