New Jersey has a state income tax, and it applies to most residents and workers
Yes, New Jersey charges state income tax. If you live in New Jersey or work there, you will owe state income tax on your wages, self-employment income, interest, dividends, and other earnings. The tax rate depends on your income level — New Jersey uses a graduated system with rates ranging from 1.4% to 10.75% as of 2024, though rates change periodically and you should verify the current brackets with the New Jersey Division of Taxation.
New Jersey residents must file a state tax return if their income exceeds the filing threshold for their filing status. Non-residents who work in New Jersey may also owe state tax on income earned there, even if they live elsewhere. The state taxes both earned income (wages and self-employment) and unearned income (interest, dividends, capital gains).
Key Takeaways
- New Jersey residents and workers owe state income tax on wages and most other income, with rates ranging from 1.4% to 10.75% depending on income level.
- You must file a New Jersey state tax return if your income exceeds the threshold for your filing status, which varies by age and household type.
- Non-residents who work in New Jersey owe tax on income earned in the state, even if they live in another state.
- The New Jersey Division of Taxation website publishes current tax rates, filing deadlines, and forms each year.
How New Jersey income tax brackets work
New Jersey uses a progressive tax system, meaning the rate increases as your income increases. You do not pay the highest rate on all your income — you pay the lowest rate on the first portion, the next rate on the next portion, and so on. The exact dollar amounts where rates change (called tax brackets) shift each year based on inflation.
For example, if you are single and earn $50,000, you would pay 1.4% on the first portion of income, then 1.75% on the next portion, and so on, only reaching the higher rates on income above certain thresholds. The more you earn, the higher the top rate you pay, but only on income above that threshold. You can find the current year's brackets on the New Jersey Division of Taxation website, which publishes them annually.
Who must file a New Jersey tax return
You must file a New Jersey state tax return if your income exceeds the filing threshold for your situation. The threshold depends on your age, filing status (single, married filing jointly, head of household), and whether you are a dependent. A single person under 65 typically must file if their income exceeds a certain amount, while someone over 65 has a higher threshold. Married couples filing jointly have a different threshold than single filers.
Even if you do not meet the filing requirement, you may want to file anyway if you had taxes withheld from your paychecks or if you are owed a refund. Non-residents who worked in New Jersey during the year should also file a New Jersey return on income earned in the state. The New Jersey Division of Taxation publishes the current year's filing thresholds on their website.
What income is taxed in New Jersey
New Jersey taxes most types of income. Wages and salaries from employment are taxed. Self-employment income is taxed. Interest and dividend income are taxed. Capital gains (profit from selling investments or property) are taxed. Rental income is taxed. Retirement income, including distributions from IRAs and 401(k)s, is generally taxed, though some retirement income may receive special treatment.
Some types of income are not taxed or receive preferential treatment. For instance, certain retirement income for people over a specific age may be excluded. Social Security benefits are generally not taxed by New Jersey. Municipal bond interest is typically not taxed. If you receive income from sources outside New Jersey, you may still owe New Jersey tax if you are a resident, though you may receive a credit for taxes paid to other states.
How to file your New Jersey state tax return
You can file your New Jersey state tax return on paper or electronically. The state accepts federal Form 1040 along with New Jersey Form NJ-1040 (the state return form). You can download forms from the New Jersey Division of Taxation website or request them by mail. The filing deadline is typically April 15, the same as the federal deadline, though you can request an extension.
Many people file electronically through tax software or a tax preparer. If you file electronically, you receive confirmation faster and can track your refund status online. If you file on paper, mail your return to the address shown on the form. The New Jersey Division of Taxation processes returns and issues refunds, which typically arrive within a certain timeframe depending on how you filed and whether you chose direct deposit.
Non-resident workers and New Jersey tax
If you live outside New Jersey but work there, you owe New Jersey state tax on the income you earn in the state. You must file a New Jersey non-resident return (Form NJ-1040-NR) reporting only the income you earned in New Jersey. Your employer may have already withheld New Jersey tax from your paychecks, which will be credited against what you owe.
Some states have reciprocal agreements with New Jersey, meaning residents of those states who work in New Jersey may not owe New Jersey tax. Pennsylvania residents, for example, may be exempt from New Jersey tax on wages earned in New Jersey under certain conditions. You should check whether your home state has such an agreement. If you paid tax to both New Jersey and your home state, you may receive a credit on your home state return for taxes paid to New Jersey.
Deductions and credits available in New Jersey
New Jersey allows various deductions and credits that can reduce the tax you owe. The state offers a standard deduction (a flat amount you can subtract from income) or you can itemize deductions if they exceed the standard amount. Deductions might include mortgage interest, property taxes, charitable contributions, and student loan interest, though rules vary and change.
New Jersey also offers tax credits for certain situations. For example, there is a Earned Income Tax Credit (EITC) for lower-income workers, a property tax credit for homeowners and renters, and credits for dependent care expenses or education costs. The value and rules for each credit differ. You should review the New Jersey Division of Taxation website or consult a tax preparer to understand which deductions and credits apply to your situation.
Frequently Asked Questions
Do I owe New Jersey tax if I moved out of state mid-year?
You owe New Jersey tax only on income you earned while you were a resident. When you move, your residency status changes on the date you leave. You must file both a part-year resident return for New Jersey and a return for your new state. Report to each state only the income you earned while living there.
What if my employer did not withhold New Jersey tax from my paycheck?
You may owe tax when you file your return. If you expect to owe a large amount, you can make estimated tax payments to New Jersey throughout the year to avoid a big bill at tax time. Alternatively, you can adjust your withholding with your employer by submitting a new W-4 form, though this affects federal withholding too.
Can I get an extension to file my New Jersey tax return?
Yes, you can request an extension from the New Jersey Division of Taxation, which typically gives you additional time to file. An extension to file is not an extension to pay — you still owe any tax due by the original deadline or you will face penalties and interest. Pay what you estimate you owe by April 15 even if you file late.
How do I know if I am considered a New Jersey resident for tax purposes?
You are a New Jersey resident if you live there for the entire tax year. If you move during the year, you are a part-year resident. The state also considers you a resident if you maintain a home in New Jersey and spend more than 183 days there during the year, even if you claim residency elsewhere. The New Jersey Division of Taxation can clarify your status if you are unsure.