Overview of New Jersey Taxes
New Jersey has a progressive income tax with rates that are among the highest in the nation. Property and sales taxes are also above average.
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Your Income Taxes Breakdown
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* These are the taxes owed for the 2023 - 2024 filing season.
Your 2023 Federal Income Tax Comparison
- Your marginal federal income tax rate
- Your effective federal income tax rate
- Your federal income taxes
Total Estimated 2023 Tax BurdenIncome Tax $ Sales Tax $ Fuel Tax $ Property Tax$ Total Estimated Tax Burden $ Percent of income to taxes = % | $ |
- About This Answer
Our income tax calculator calculates your federal, state and local taxes based on several key inputs: your household income, location, filing status and number of personal exemptions.
How Income Taxes Are Calculated
- First, we calculate your adjusted gross income (AGI) by taking your total household income and reducing it by certain items such as contributions to your 401(k).
- Next, from AGI we subtract exemptions and deductions (either itemized or standard) to get your taxable income. Exemptions can be claimed for each taxpayer as well as dependents such as one’s spouse or children.
- Based on your filing status, your taxable income is then applied to the the tax brackets to calculate your federal income taxes owed for the year.
- Your location will determine whether you owe local and / or state taxes.
- Last Updated: January 1, 2024
When Do We Update? - We regularly check for any updates to the latest tax rates and regulations.
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Taxes in New Jersey
New Jersey State Tax Quick Facts
- Income tax: 1.40% - 10.75%
- Sales tax: 6.625% (local tax 0% - 2%)
- Property tax: 2.47% average effective rate
- Gas tax: 42.30 cents per gallon of regular gasoline, 49.30 cents per gallon of diesel
The Garden State has a lot of things going for it, but low taxes are not among its virtues. Homeowners in New Jersey pay an average of $8,797 in property taxes annually, which equals an effective property tax rate of 2.47%, the highest in the nation. The state’s income tax ranges from 1.40% up to 10.75%, one of the highest top rates in the country.
Of course, if you don’t own a home or if your income places you in one of New Jersey’s lower tax brackets, the picture may not be so bleak. New Jersey’s sales tax rate is relatively close to the national average.
A financial advisor can help you understand how taxes fit into your overall financial goals. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
New Jersey Income Taxes
New Jersey’s income tax is structured similarly to the federal income tax. Rates are based on income tax brackets, with income within each bracket being taxed at the corresponding rate. The table below shows brackets and rates for filers in New Jersey.
All of the rates above apply to New Jersey taxable income, which is total income (including capital gains) minus certain deductions, as well as the New Jersey personal exemption of $1,000. Some forms of income that are not taxable include unemployment compensation, Social Security benefits, workers’ compensation and lottery winnings of $10,000 or less. Expenses that may be deducted in New Jersey include certain unreimbursed medical expenses, New Jersey property taxes, Archer MSA contributions and, if you're self-employed, health insurance payments.
New Jersey Sales Tax
New Jersey has a single, statewide sales tax rate. On Jan. 1, 2024, that rate is 6.625%. The flat sales tax rate means you will pay the same rate wherever you are in the state, with two exceptions. First, there are New Jersey’s “Urban Enterprise Zones,” where purchases made at qualified businesses (typically retailers) face a reduced sales tax rate of 3.3125%.
Outside of those exceptions, the statewide sales tax rate applies to most products and services, including electronics, furniture, fitness club memberships, parking, landscaping services and digital property (e.g. electronically downloaded music, videos, software, etc.). Some items, however, are exempt. Groceries, prescription and over-the-counter drugs and most types of clothing and footwear are all exempt.
New Jersey Property Tax
New Jersey has the highest property taxes in the country. The average effective property tax rate is 2.47%. The median real estate taxes paid on a home in the state is $8,797 annually.
For a comparison, in Bergen and Essex Counties (west of New York City) the average annual property tax bill is $10,000. As mentioned above, property taxes are usually tax deductible on your New Jersey income tax return. Starting with tax year 2018, you can now deduct up to $15,000 of property taxes. Prior to 2018, the maximum property tax deduction was $10,000.
If you are looking to purchase a property in the Garden State or refinance one, take a look at our New Jersey mortgage guide for details about getting a mortgage in the state. You can also calculate your property taxes with our New Jersey property tax calculator.
New Jersey Inheritance and Estate Tax
New Jersey has an inheritance tax. The inheritance tax rate ranges from 11% to 16% and applies only to beneficiaries who are not one of the following in relation to the decedent: mother, father, grandparent, spouse, civil union partner, child, grandchild, great-grandchild, stepchild or domestic partner. Meanwhile, siblings, close friends or step-parents would all be required to pay the inheritance tax, although the first $25,000 of the inheritance is exempt. Anyone outside of these categories will not receive an exemption.
New Jersey has recently phased out its estate tax. As of Jan. 1, 2018, the New Jersey Estate Tax will no longer be imposed on anyone dying on or after that date.
New Jersey Capital Gains Tax
Capital gains are taxable in the state of New Jersey. They are treated as regular income and, in combination with other income, they are taxed at the rates in the tables above.
New Jersey Cigarette Tax
New Jersey collects taxes of $2.70 per pack of 20 cigarettes.
- During the Revolutionary War, nearly 300 engagements took place in New Jersey, more than in any other state.
- New Jersey was the first state to sign the Bill of Rights.
