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New Jersey Taxes: What You Need to Know
New Jersey residents pay some of the country’s highest property and income tax rates. However, the state’s sales tax falls in the middle compared to other states, and there are various tax breaks available for older adults. While there is no tax on Social Security benefits, New Jersey does tax inheritances and most pensions.
You must pay taxes even if you reside in New Jersey or earn income from a New Jersey source as a nonresident.
However, the state’s income tax rates vary from 1.4% to 10.75%, and the sales tax rate is 6.625%. (Source) All tax revenues go into the State Treasury for general state use; none goes to municipalities. The state sales tax is reduced by half to encourage economic development, resulting in an effective tax rate of 3.3125% in urban enterprise zones. (Source)
New Jersey tax provides deductions and credits to lower your tax liability, including deductions for medical expenses, alimony, and self-employed health insurance. The state also offers tax credits such as the earned income tax credit and child and dependent care credit.
So, let’s look into the other major tax rates and percentages.
Federal State, and Local Tax Withholding
Federal Income Tax: The withheld amount is based on your income, filing status, and the information provided on your W-4 form. For 2026, the rates range from 10% to 37%.
State Income Tax: New Jersey has a progressive income tax system with rates ranging from 1.4% to 10.75%.
Local Taxes: New Jersey does not have local income taxes.
FICA & State Insurance Taxes
FICA Taxes:
- Social Security: 6.2% of your wages on the first $184,500, matched by your employer. (Source)
- Medicare: 1.45% of your wages, also matched by your employer. An additional 0.9% Medicare surtax applies to wages over $200,000 for single filers and $250,000 for joint filers. (Source)
State Insurance Taxes:
- State Temporary Disability Insurance (TDI): 0.19% on the first $171,100 in covered wages. Maximum employee contribution: $325.09. (Source)
- State Family Leave Insurance (FLI): 0.23% on the first $171,100 in covered wages. Maximum employee contribution: $393.53. (Source)
- State Workers Compensation Insurance: Varies by employer.
Pre-Tax Deductions
Medical Insurance: Premiums are often deducted before taxes, reducing taxable income.
401(k) Contributions: Contributions to a 401(k) plan are pre-tax for federal purposes, lowering your federal taxable income. For 2026, the maximum contribution limit is $24,500, with an additional $8,000 catch-up contribution for individuals aged 50 and older. (Source)
Tax Percentage Breakdown
| Tax Type | Percentage |
|---|---|
| Federal Income Tax | 10% – 37% |
| State Income Tax | 1.4% – 10.75% |
| Social Security (FICA) | 6.2% (on first $184,500) |
| Medicare (FICA) | 1.45% |
| Additional Medicare Surtax | 0.9% (over $200,000) |
| State Temporary Disability Insurance (TDI) | 0.19% (on first $171,100) |
| State Family Leave Insurance (FLI) | 0.23% (on first $171,100) |
Median Household Income in New Jersey
The median household income in New Jersey was $103,500 as of 2024. There has been a significant increase from the previous year when it was $91,590.
(Source)
Source: U.S. Census Bureau, Current Population Survey Annual Social and Economic Supplement, via Federal Reserve Bank of St. Louis (FRED). Current dollars, not seasonally adjusted.
New Jersey Tax Brackets 2026
New Jersey has a graduated income tax system, meaning the tax rate increases as income increases. The tax brackets vary based on filing status, such as single, married filing jointly, married filing separately, and head of household. These rates are designed to ensure that higher earners pay a higher percentage of their income in taxes.
Here are the New Jersey tax brackets for 2026 for different filing statuses:
| Filing Status | Income Range | Tax Rate |
|---|---|---|
| Single | $0 – $20,000 | 1.4% |
| $20,001 – $35,000 | 1.75% | |
| $35,001 – $40,000 | 3.5% | |
| $40,001 – $75,000 | 5.525% | |
| $75,001 – $500,000 | 6.37% | |
| $500,001 – $1,000,000 | 8.97% | |
| Over $1,000,000 | 10.75% | |
| Married Filing Jointly | $0 – $20,000 | 1.4% |
| $20,001 – $50,000 | 1.75% | |
| $50,001 – $70,000 | 2.45% | |
| $70,001 – $80,000 | 3.5% | |
| $80,001 – $150,000 | 5.525% | |
| $150,001 – $500,000 | 6.37% | |
| $500,001 – $1,000,000 | 8.97% | |
| Over $1,000,000 | 10.75% | |
| Married Filing Separately | $0 – $20,000 | 1.4% |
| $20,001 – $35,000 | 1.75% | |
| $35,001 – $40,000 | 3.5% | |
| $40,001 – $75,000 | 5.525% | |
| $75,001 – $500,000 | 6.37% | |
| $500,001 – $1,000,000 | 8.97% | |
| Over $1,000,000 | 10.75% | |
| Head of Household | $0 – $20,000 | 1.4% |
| $20,001 – $50,000 | 1.75% | |
| $50,001 – $70,000 | 2.45% | |
| $70,001 – $80,000 | 3.5% | |
| $80,001 – $150,000 | 5.525% | |
| $150,001 – $500,000 | 6.37% | |
| $500,001 – $1,000,000 | 8.97% | |
| Over $1,000,000 | 10.75% |
(Source)
For an example
Let’s say you are single, and your taxable income is $50,000:
- First $20,000: Taxed at 1.4% = $280
- Next $15,000 (from $20,001 to $35,000): Taxed at 1.75% = $262.50
- Next $5,000 (from $35,001 to $40,000): Taxed at 3.5% = $175
- Remaining $10,000 (from $40,001 to $50,000): Taxed at 5.525% = $552.50
So, the total tax is $280 + $262.50 + $175 + $552.50 = $1,270
