Yes, New Jersey has a state income tax
New Jersey taxes your income at the state level. Unlike a handful of states that have no income tax at all, New Jersey residents and people who work in the state pay state income tax on wages, self-employment income, investment gains, and other earnings. The tax rate depends on how much you earn — the more you make, the higher your rate.
If you live in New Jersey, you file a state tax return in addition to your federal return. If you work in New Jersey but live in another state, you may owe New Jersey tax on your wages. The state's Division of Taxation handles collection and enforcement.
Key Takeaways
- New Jersey has a progressive income tax system with rates ranging from 1.4% to 10.75%, depending on your income level.
- You must file a New Jersey state return if you live in the state and earn above the filing threshold, even if you owe no tax.
- New Jersey offers tax credits for property taxes, earned income, and dependent care that can reduce what you owe.
- If you work in New Jersey but live elsewhere, you typically owe tax only on income earned within the state.
New Jersey income tax rates and brackets for 2024
New Jersey uses a progressive tax system, meaning your tax rate increases as your income rises. You do not pay the top rate on all your income — only on the portion that falls within each bracket.
For the 2024 tax year, New Jersey has seven tax brackets. The lowest rate is 1.4% on income up to $20,000 for single filers (and higher thresholds for married couples filing jointly). The highest rate is 10.75% on income over $5 million. The brackets in between — 1.75%, 3.5%, 5.525%, 6.37%, 8.97%, and 10.75% — explore to different income ranges.
These brackets adjust slightly each year for inflation. The exact dollar amounts change, so if you are planning your taxes, check the New Jersey Division of Taxation website for the current year's brackets before you file.
Who has to file a New Jersey state return
You must file a New Jersey return if you live in the state and your income exceeds the filing threshold. For 2024, that threshold is $10,000 for single filers under 65, $12,500 for single filers 65 and older, $20,000 for married couples filing jointly under 65, and $25,000 for married couples filing jointly with at least one spouse 65 or older.
Even if your income falls below the threshold, you should file if you had taxes withheld from your paychecks — you may be due a refund. You must also file if you want to claim certain tax credits, such as the Earned Income Tax Credit or the property tax deduction.
If you moved to or from New Jersey during the year, you may have to file both a New Jersey return and a return in your other state. New Jersey taxes residents on all income, regardless of where it was earned.
Tax credits and deductions available in New Jersey
New Jersey offers several credits that can reduce your tax bill. The Homestead Property Tax Deduction is one of the largest — it allows homeowners to deduct a portion of their property taxes from their state income tax. You must own and live in your home and meet income limits to may have access to. The deduction amount varies based on your income and the property taxes you paid.
The Earned Income Tax Credit (EITC) is available to lower-income workers. New Jersey's version supplements the federal credit, meaning you can claim both. The state credit is worth up to 40% of the federal credit you receive, depending on your income and family size.
Other credits include the Dependent Care Credit (for child care or elder care expenses), the Earned Income Credit for Disabled Workers, and the Charitable Contribution Credit. Some credits are refundable, meaning you can receive money back even if you owe no tax. Others reduce your tax bill to zero but do not generate a refund.
How to file your New Jersey state return
You can file your New Jersey return on paper or electronically. The state accepts returns filed through tax software, tax professionals, and the Division of Taxation's own online filing system.
The filing important date is typically April 15, the same as the federal important date. If you file your federal return and request an extension, your New Jersey extension is automatic — you have until October 15 to file. However, if you owe tax, you should pay by April 15 to avoid penalties and interest, even if you file late.
You will need your Social Security number, income documents (W-2s, 1099s, K-1s), and records of any deductions or credits you are claiming. If you are claiming the property tax deduction, have your property tax bill or assessment notice ready. Keep copies of everything you file for at least three years.
Self-employment and business income in New Jersey
If you are self-employed or own a business in New Jersey, you owe state income tax on your net business income. You report this on your state return using a schedule similar to the federal Schedule C.
You may also owe New Jersey's Corporation Business Tax if your business is structured as a corporation, S-corporation, partnership, or LLC. The rules vary by business type and income level. Sole proprietors report business income on their individual state return and do not file a separate business return, but they still owe income tax on the profit.
Self-employed people should set aside money for taxes throughout the year. New Jersey allows quarterly estimated tax payments if you expect to owe $400 or more. Paying estimated tax on time can help you avoid penalties when you file your return.
Out-of-state residents who work in New Jersey
If you live in another state but work in New Jersey, you owe New Jersey income tax on the wages you earn within the state. You will file a part-year or nonresident return with New Jersey and report only your New Jersey income.
Your employer should withhold New Jersey tax from your paycheck if you work in the state. If it does not, you may owe tax when you file. Some states offer credits for taxes paid to other states, so you may not pay tax twice on the same income — check with your home state's tax authority about reciprocal agreements.
If you moved to New Jersey during the year or moved away, you file a part-year resident return. You report income earned while you were a resident on the resident portion and income earned while you were a nonresident on the nonresident portion.
Frequently Asked Questions
Does New Jersey tax retirement income or Social Security?
New Jersey does not tax Social Security benefits. Retirement income from pensions and 401(k) withdrawals is taxable, but there is a pension and retirement income exclusion available to residents 62 and older. The exclusion amount depends on your income level and type of retirement income.
What if I did not have enough tax withheld during the year?
If you owe tax when you file, you can pay in full by the important date or set up a payment plan with the Division of Taxation. Penalties and interest accrue on unpaid tax, so paying as soon as possible reduces what you ultimately owe. You can also adjust your withholding for the next year to avoid owing again.
Can I file my New Jersey return electronically?
Yes. You can file electronically through tax software, a tax professional, or the state's online system. E-filing is faster than mailing a paper return and produces a confirmation number so you know the state received it.
What happens if I file late or do not file at all?
If you owe tax and file late, the state charges a failure-to-file penalty and interest on the unpaid amount. If you are due a refund, there is no penalty for filing late, but you lose the refund if you do not file within three years. The Division of Taxation can also pursue collection action if you ignore a tax bill.
How do I know if I may have access to for the property tax deduction?
You must own and live in your home in New Jersey and meet income limits. The income threshold varies by year. You claim the deduction on your state return using the appropriate form. The Division of Taxation website lists the current income limits and deduction amounts for your filing status.