New Jersey Income Tax Calculator
Tax Breakdown
New Jersey Tax Overview
New Jersey Income Tax Brackets 2026
New Jersey uses a graduated income tax system with rates ranging from 1.4% to 10.75%. The tax structure is relatively favorable for low- and moderate-income earners, with the first $20,000 of taxable income taxed at only 1.4%. However, the rates escalate significantly at higher income levels, with a 10.75% rate applying to income over $1 million. This top rate places New Jersey among the five highest income tax states in the nation.
New Jersey does not conform to the federal standard deduction or personal exemption structure. Instead, the state provides its own set of deductions and exemptions. Single filers receive a personal exemption of $1,000, while married filing jointly receive $2,000. Additional exemptions are available for dependents ($1,500 each), taxpayers and spouses 65+ ($1,000 each), and blind or disabled taxpayers ($1,000). There is no standard deduction in New Jersey; instead, these personal exemptions serve a similar purpose but are much smaller than the federal standard deduction.
| Taxable Income (Single) | Rate |
|---|---|
| $0 – $20,000 | 1.40% |
| $20,000 – $35,000 | 1.75% |
| $35,000 – $40,000 | 3.50% |
| $40,000 – $75,000 | 5.525% |
| $75,000 – $500,000 | 6.37% |
| $500,000 – $1,000,000 | 8.97% |
| Over $1,000,000 | 10.75% |
New Jersey Sales Tax
New Jersey's state sales tax rate is 6.625%. Unlike most states, New Jersey does not allow local jurisdictions to impose additional sales taxes, so the rate is uniform throughout the state. This simplifies compliance for businesses and provides certainty for consumers.
One of New Jersey's most notable sales tax features is its extensive list of exemptions. Clothing and footwear are completely exempt from sales tax in New Jersey, making the state a popular shopping destination for residents of neighboring New York (which taxes most clothing) and Pennsylvania (which also exempts clothing). Unprepared food (groceries), prescription medications, over-the-counter drugs, and medical equipment are also exempt.
New Jersey also has designated Urban Enterprise Zones (UEZs) where qualifying retailers can charge a reduced sales tax rate of 3.3125% (half the normal rate). These zones exist in economically distressed areas including parts of Newark, Camden, Trenton, Paterson, Elizabeth, and other cities. This program encourages retail activity in underserved communities.
New Jersey Property Tax — Highest in the United States
New Jersey's effective property tax rate of approximately 2.13% is the highest in the nation. The median annual property tax payment in New Jersey exceeds $9,000, and many homeowners in desirable suburbs pay $15,000 to $25,000 or more per year. This extraordinary property tax burden is the single most significant financial consideration for New Jersey homeowners.
The primary driver of high property taxes in New Jersey is the decentralized structure of local government and education funding. New Jersey has 564 municipalities, 21 counties, and over 560 independent school districts. Each school district, municipality, and county levies its own property tax, and school taxes typically account for 55-65% of the total property tax bill. Efforts to consolidate school districts or share services have been politically difficult, though the state has made incremental progress.
New Jersey provides several property tax relief programs. The ANCHOR Program (Affordable New Jersey Communities for Homeowners and Renters) provides direct benefits to homeowners with incomes up to $250,000 and renters with incomes up to $150,000. The Senior Freeze Program reimburses eligible seniors for property tax increases. Additionally, the Homestead Benefit provides credits applied directly to property tax bills. Veterans may qualify for a $250 annual property tax deduction.
New Jersey Inheritance Tax
While New Jersey eliminated its estate tax in 2018, it retains an inheritance tax that applies to transfers to certain beneficiaries. Class A beneficiaries (spouse, children, grandchildren, parents) are fully exempt. Class C beneficiaries (siblings) pay rates of 11% to 16% on amounts over $25,000. Class D beneficiaries (all others, including friends, nieces, nephews, and non-relative heirs) pay rates of 15% to 16% on amounts over $500. This inheritance tax is relatively unusual among states and can create unexpected tax liabilities for non-immediate family members.
New Jersey vs. Neighboring States
New Jersey's high overall tax burden creates strong incentives to compare with nearby states:
- New York — 4%-10.9% income tax (plus NYC tax), 8% avg sales tax, 1.40% property tax. New York has high income taxes but lower property taxes than NJ. NYC residents pay additional city income tax.
- Pennsylvania — 3.07% flat income tax, 6% sales tax, 1.36% property tax. PA offers much lower income tax and property taxes. Popular for NJ residents looking to reduce their tax burden.
- Connecticut — 3%-6.99% income tax, 6.35% sales tax, 1.63% property tax. CT has lower rates across all three categories but is still a high-tax state nationally.
- Delaware — 2.2%-6.6% income tax, no sales tax, 0.53% property tax. Delaware offers dramatically lower property taxes and no sales tax. A common consideration for southern NJ residents.
Use our state comparison calculator to see exactly how much you could save.
Frequently Asked Questions
New Jersey has graduated brackets from 1.4% to 10.75%. The top rate of 10.75% applies to income over $1 million. Moderate-income earners benefit from relatively low rates on the first $40,000.
NJ's 2.13% effective rate is driven by the decentralized government structure with over 560 school districts, each funded primarily by local property taxes. The median annual property tax payment exceeds $9,000.
New Jersey's sales tax is 6.625% statewide. Clothing, groceries, and prescription drugs are exempt. Urban Enterprise Zones offer a reduced rate of 3.3125%.
NJ excludes up to $100,000 of retirement income for residents 62+ with income under $150,000. Social Security is not taxed. Other retirement income above the exclusion is taxed normally.
No estate tax (eliminated 2018), but NJ has an inheritance tax. Spouses and children are exempt. Siblings pay 11-16% on amounts over $25,000. Unrelated heirs pay 15-16%.