New Jersey

Sales Tax

  • Statewide: 6.625%
  • Counties cannot levy any additional sales tax.
  • Common Exceptions at State Level:
    • Prescription Medicine: Exempt
    • Unprepared Foods: Exempt
    • Clothing: Exempt
  • Gasoline Tax: 69.10 cents/gallon (Includes all state, local and federal taxes)
  • Diesel Fuel Tax: 82.10 cents/gallon (Includes all state, local and federal taxes)
  • Urban Enterprise Zones are allowed tax relief by allowing some goods to be exempt and allowing qualified retailers to charge 3.3125% instead of 6.625%.

 

Personal Income Tax

  • Personal Income Tax Rate Range: Seven brackets (eight for Married Filing Jointly) from 1.4% to 10.75% (top rate on income greater than $1,000,000)
  • Standard deduction: None
  • Personal Exemption Allowance: $1,000. Dependent Exemption: $1,500, Veterans $6,000
  • Itemized Deductions Allowed?: Yes, with exceptions
  • Retirement Income
    • Social Security: Exempt
    • IRAs: Taxable at ordinary income tax rates*
    • 401Ks/Defined contribution employer retirement plans: Taxable at ordinary income tax rates*
    • Private pensions: Taxable at ordinary income tax rates*
    • Public Pensions: Taxable at ordinary income tax rates*  
  • Military Pay
    • Active Duty Pay: Taxable (combat-zone pay not taxable by the state if received in 2021 or later)
    • Military Retirement Pay: Taxpayers are asked not to report military retirement pay on their tax returns.
    • Military Disability Pay: New Jersey does not tax total and permanent disability income if you are considered disabled under the federal Social Security Act do not report these payments (Source)
    • VA Disability Dependency & Indemnity Compensation Benefits: New Jersey does not tax total and permanent disability income if you are considered disabled under the federal Social Security Act do not report these payments. (Source)
    • SBP/SSBP/RCSBP/RSFPP: Taxpayers are asked not to report suvivor benefits on their tax returns.
Income Tax Comments: *Taxpayer 62 or older with income $150,000 or less can exclude up to $75,000 ($100,000 married filing jointly), income between $100,001 and $125,000 can deduct 37.5% if single (50% married filing jointly), income between $125,001 and $150,000 can deduct 18.75% single (25% married filing jointly). State allows county- and city-level income tax.  

 

Property Tax

  • Local municipalities average 2.49% of the property's assessed value.
  • Calculation of assessed value: 100% of fair market value
  • Relief programs for:
    • Owner-occupied: Credit programs available based on income.
    • 65 and over or Disabled: May be eligible for tax credit of up to $500 if income less than $150,000. Can be reimbursed for property tax increases based on income (cannot exceed $92,969) and residency requirements. Credits of up to $250 available if income under $10,000.
    • Veterans/Unremarried Surviving Spouse: Tax credit of up to $250 available. 
    • Disabled Veterans/Unremarried Surviving Spouse: Full exemption if 100% service-connected disability.  
  • Personal Property Tax: Yes. Rates and exemptions vary.

 

Inheritance & Estate Taxes: Estate tax has been repealed for deaths after Jan. 1, 2018. Deaths prior to that may owe estate tax. Exemptions for some family available. Inheritance tax on $500 or more up to 16%; some family members are exempt.

 

Department of Revenue website: www.state.nj.us/treasury/revenue/

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