How much is New Jersey state tax on my income?

How much is New Jersey state tax on my income?

The New Jersey state income tax isn’t a single number; it’s a progressive tax, meaning the rate increases as your income goes up. This is a crucial distinction. It doesn’t mean your entire income is taxed at the highest rate you fall into. Instead, each portion of your income is taxed at the rate for its specific bracket.

For the 2024 tax year (the taxes you’ll file in 2025), New Jersey’s income tax rates range from 1.4% to 10.75%. The exact amount you pay depends on your taxable income and filing status.

This guide is designed for anyone living and working in New Jersey who needs to figure out their tax liability, from new hires to seasoned professionals. We’ll show you exactly how to calculate it and what to expect.

New Jersey Income Tax Brackets (2025)

The state tax rate tables are different for single filers versus those filing jointly.

• For Single, Married Filing Separately, or Estates & Trusts:

Taxable Income	Tax Rate
$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%

• For Married Filing Jointly, Head of Household, or Qualifying Widow(er):

Taxable Income	Tax Rate
$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%

How Do I Calculate My NJ Income Tax?

You might be asking, “How do I apply these rates to my salary?” The trick is to do the calculation bracket by bracket. Your taxable income is the amount left after subtracting deductions and exemptions from your gross income.

Practical Example: Single Filer with $65,000 Taxable Income

Let’s walk through it for a single person with a $65,000 taxable income. This individual’s highest marginal tax rate is 5.525%, but they don’t pay that on everything they earned.

1. First $20,000: Taxed at 1.4%.
   • $20,000 x 0.014 = $280
2. Next $15,000: (from $20,001 to $35,000) Taxed at 1.75%.
   • $15,000 x 0.0175 = $262.50
3. Next $5,000: (from $35,001 to $40,000) Taxed at 3.5%.
   • $5,000 x 0.035 = $175
4. Remaining $25,000: (from $40,001 to $65,000) Taxed at 5.525%.
   • $25,000 x 0.05525 = $1,381.25

Total NJ Tax = $280 + $262.50 + $175 + $1,381.25 = $2,098.75

Your effective tax rate is what you actually paid divided by your total income ($2,098.75 / $65,000 = 3.23%). It’s a much lower number than the 5.525% marginal rate.

Key Takeaways and Insights

• New Jersey has no local income taxes. This makes things simpler compared to states like New York or Pennsylvania where city taxes can add up.
• Property tax relief is a big deal in NJ. For homeowners, programs like the ANCHOR benefit can provide significant rebates, reducing your overall tax burden.
• Tools like the TurboTax or H&R Block state tax calculators can make this process a breeze. They can quickly calculate your liability based on your information, and reputable services like these also help you uncover deductions and credits you might not know about.

Frequently Asked Questions (FAQ)

1. Who has to file a New Jersey tax return?

You must file if your gross income exceeds $10,000 for single filers or $20,000 for married couples filing jointly. This is a critical first step to see if you even need to file.

2. What is the difference between marginal and effective tax rates?

The marginal tax rate is the percentage you pay on your last dollar of income. The effective tax rate is the total percentage you actually paid on all your income, which is always lower in a progressive system.

3. Does New Jersey have a standard deduction?

No, New Jersey does not offer a standard deduction. Instead, you can claim personal exemptions and specific deductions for things like property taxes, medical expenses, and alimony payments.

4. Are there special tax credits for families or students in NJ?

Yes. The state offers a number of credits, including the New Jersey Earned Income Tax Credit (NJEITC) for low-to-moderate-income families and a dependent exemption for college students.

5. What is the ANCHOR benefit?

The Affordable New Jersey Communities for Homeowners and Renters (ANCHOR) program provides property tax relief to eligible residents. The amount of the benefit varies based on income and filing status, and it can be a substantial help.

6. Can I file my New Jersey tax return for free?

Yes, the state offers a free online portal called NJ File for residents with simple returns. However, for more complex situations, using professional software or a tax preparer might be a good idea.