New Jersey's income tax rates range from 1.4% to 10.75%, depending on your filing status and income level
New Jersey has a progressive income tax system, meaning the rate you pay increases as your income rises. The state uses six tax brackets. If you are single, you pay 1.4% on income up to $20,000, and the rate climbs to 10.75% on income over $500,000. Married couples filing jointly have higher bracket thresholds — for example, the top rate applies to income over $1 million rather than $500,000.
The exact amount you owe depends on which bracket your total income falls into. If you earn $60,000 as a single filer, you do not pay 5.525% on all of it — you pay 1.4% on the first $20,000, then higher rates on each chunk above that until you reach $60,000. This is how progressive tax brackets work across all states that use them.
New Jersey also taxes retirement income differently depending on the source. Social Security benefits are not taxed. Withdrawals from traditional IRAs and 401(k) plans are taxed as ordinary income. Pension income may be partially exempt if you meet age and income requirements — you can exclude up to $100,000 of pension or retirement income if you are 62 or older and your income is below certain thresholds.
Key Takeaways
- New Jersey income tax starts at 1.4% and reaches 10.75% at the highest bracket, with six total brackets based on your income and filing status.
- Sales tax in New Jersey is 6.625% statewide, though some counties add a local tax that brings the total to 7.625%.
- Property tax rates vary by municipality and are not set by the state — your local tax bill depends on your home's assessed value and your town's tax rate.
- Social Security income is not taxed in New Jersey, but traditional retirement account withdrawals are taxed as ordinary income.
- Tax brackets and rates change each year, so your rate may shift even if your income stays the same.
Sales tax: 6.625% plus possible local additions
New Jersey's statewide sales tax is 6.625%. However, some counties and municipalities add a local sales tax on top of that. Bergen County, for example, adds 1%, bringing the total to 7.625%. Other counties add smaller amounts or none at all. The combined rate you pay at checkout depends on where you are shopping, not where you live.
Certain items are exempt from sales tax in New Jersey. Groceries, prescription medications, and medical devices do not carry sales tax. Clothing and footwear under $110 per item are also exempt. Restaurant meals, prepared foods, and alcohol are taxed. If you buy something online from a seller with a physical presence in New Jersey, you typically pay sales tax; if the seller has no New Jersey location, tax rules depend on federal law and the seller's policies.
Property tax: Set by your municipality, not the state
New Jersey does not set a statewide property tax rate. Instead, each municipality sets its own rate based on local budget needs and property values. Your property tax bill is calculated by multiplying your home's assessed value by your town's tax rate. Two identical homes in different towns can have very different tax bills.
Property tax assessments happen at different intervals depending on your municipality — some reassess every year, others every three or four years. If you believe your assessment is too high, you can file a tax appeal with your county tax board. The important date to file is usually in the spring, and the process varies by county. Your local assessor's office can tell you the important date and procedure for your town.
New Jersey offers property tax relief programs for certain homeowners. The Homestead Property Tax Deduction reduces property taxes for may be able to access owner-occupied homes. The Senior Freeze program freezes property taxes for homeowners 65 and older who meet income limits. The Disabled Persons Property Tax Deduction applies to people with disabilities. Each program has income and asset limits, and you must reapply each year.
How tax brackets work and why they change yearly
Tax brackets are the income ranges that determine which rate applies to your income. New Jersey adjusts its brackets each year for inflation, which means the dollar amounts shift even if the percentages stay the same. For example, if the first bracket was $20,000 one year, it might be $20,500 the next year. This adjustment means your tax rate can change even if your income does not.
The state publishes updated brackets in early spring, usually by March. If you are self-employed or expect a large change in income, you may want to check the current brackets before the year ends so you can estimate your tax bill. The New Jersey Division of Taxation website lists the current brackets for each filing status.
Tax credits and deductions that lower your bill
New Jersey offers several tax credits that directly reduce the amount you owe. The Earned Income Tax Credit (EITC) is available to low- and moderate-income workers and is often worth hundreds of dollars. The Child and Dependent Care Credit helps pay for childcare expenses. The Residential Energy Efficient Property Credit gives a tax break for installing solar panels or other renewable energy systems on your home.
You can also deduct certain expenses from your income before calculating tax. Mortgage interest on your primary residence is deductible. Property taxes you pay are deductible up to $10,000 per year under federal law, which affects your New Jersey return as well. Charitable donations are deductible if you itemize rather than take the standard deduction. Self-employed people can deduct business expenses and half of their self-employment tax.
Filing status and how it affects your rate
Your filing status determines which tax brackets explore to you. Single filers use one set of brackets. Married couples filing jointly use higher thresholds, which usually results in a lower overall tax rate. Married filing separately uses the same brackets as single filers, making it rarely advantageous. Head of household status (for unmarried people supporting dependents) uses brackets between single and married filing jointly.
Choosing the right filing status matters because it directly changes which bracket your income falls into. A married couple with $100,000 in combined income pays less tax than two single people earning $50,000 each, even though the total income is the same. If your marital status changed during the year, you use the status you had on December 31.
Frequently Asked Questions
Does New Jersey tax Social Security?
No. Social Security benefits are not subject to New Jersey income tax. However, if you have other income sources like pensions, retirement account withdrawals, or wages, those are taxed normally. Your Social Security income does not count toward the income thresholds for other tax credits or deductions.
What is the difference between the tax rate and what I actually pay?
Your tax rate is the percentage applied to your income. What you actually pay depends on your total income, filing status, and deductions. If you earn $50,000 and are single, you do not pay 5.525% on all of it — you pay lower rates on the first portions and higher rates on the rest. Credits and deductions also reduce your final bill.
Can I lower my property tax bill?
You can file a tax appeal if you believe your assessment is too high — contact your local assessor's office for the important date and process. If you are a homeowner 65 or older, disabled, or meet income limits, you may be may be able to access for a state property tax relief program like the Homestead Deduction or Senior Freeze.
When do New Jersey tax brackets change?
The state adjusts tax brackets each year for inflation, usually announcing the new brackets in early spring. The changes are small most years but add up over time. You can find the current brackets on the New Jersey Division of Taxation website.
Is there a local income tax in New Jersey?
No. New Jersey has only a state income tax, not a local or city income tax. However, some municipalities add local sales tax on top of the statewide rate, and all municipalities set their own property tax rates.