2025 New Jersey Tax Brackets
New Jersey uses a progressive system with 7 brackets. The top rate of 10.75% applies to income exceeding $1 million, making it the third-highest top rate in the nation behind California (13.3%) and Hawaii (11%).
| Tax Rate | Taxable Income Range |
|---|---|
| 1.4% | $0 – $20,000 |
| 1.75% | $20,000 – $35,000 |
| 3.5% | $35,000 – $40,000 |
| 5.525% | $40,000 – $75,000 |
| 6.37% | $75,000 – $500,000 |
| 8.97% | $500,000 – $1,000,000 |
| 10.75% | Over $1,000,000 |
A single filer earning $80,000 in New Jersey would owe approximately $3,200 in state tax — an effective rate of about 4%. Despite the high top rate, NJ's lower brackets start at just 1.4%, keeping the effective rate manageable for most residents.
New Jersey Deductions
New Jersey does not offer a standard deduction, which is a notable difference from most states. Instead, the state provides a $1,000 personal exemption per filer and each dependent. This means a married couple with two children would receive $4,000 in exemptions — significantly less than the federal standard deduction.
However, NJ offers a property tax deduction of up to $15,000 on the state return. Given that New Jersey has the highest average property taxes in the nation (approximately 2.2% of home value), this deduction is extremely valuable. On a $400,000 home, property taxes might reach $8,800, all of which is deductible on the NJ return.
NJ also allows deductions for medical expenses exceeding 2% of gross income (more generous than the federal 7.5% threshold), alimony payments made under pre-2019 agreements, and Health Enterprise Zone deductions for qualifying taxpayers.
New Jersey Tax Credits
The NJ Earned Income Tax Credit is equal to 40% of the federal EITC — one of the highest percentages in the country. A family receiving $5,000 in federal EITC would receive an additional $2,000 from New Jersey. The NJ Child Tax Credit provides up to $1,000 per child under 6 for qualifying families. The Property Tax Credit offers $50 for homeowners and tenants as an alternative to the property tax deduction.
Tax Calculation Examples
| Gross Income | Filing Status | NJ State Tax | Effective Rate |
|---|---|---|---|
| $50,000 | Single | $1,575 | 3.2% |
| $75,000 | Single | $2,958 | 3.9% |
| $100,000 | Single | $4,550 | 4.6% |
| $150,000 | Married Jointly | $5,860 | 3.9% |
Special Considerations for NJ Residents
NJ Transit Benefits. New Jersey offers tax benefits for commuters using public transportation. Employer-provided transit passes are excluded from state income up to federal limits.
Retirement Income Exclusion. Taxpayers 62 or older with gross income of $150,000 or less can exclude up to $100,000 in retirement income from NJ state tax. This is one of the most generous retirement income exclusions in the nation, making NJ potentially attractive for retirees despite its reputation as a high-tax state.
NJ-NY Cross-Border Issues. New Jersey residents who work in New York City pay NY state tax on their wages but receive a credit on their NJ return for taxes paid to NY. However, NJ does not credit NYC city tax, meaning NJ residents working in NYC face a combined state and city tax burden from both states. This affects hundreds of thousands of cross-Hudson commuters.
New Jersey Income Tax Overview
The standard deduction is subtracted from your gross income to determine your taxable income before the brackets are applied. Practical tip: the effective rate you actually pay is usually far lower than the top marginal rate. For typical middle-income earners, the effective state tax rate lands well below the headline rate.
The standard deduction directly reduces your taxable income before any tax brackets are applied. The state sales tax rate is 6.625% (avg combined 7%), which applies to most goods and some services depending on local laws. Property taxes in New Jersey average approximately 2.23% of home value. For context, the national average property tax rate is roughly 1.1%. Residents should check their city and county rates, as local add-ons can significantly increase the combined sales tax rate above the state base rate.
Compared to neighboring states — New York (10.9%), Pennsylvania (3.07%), Delaware (2.2-6.6%) — New Jersey offers a distinct balance of rates, deductions, and available credits that can significantly impact your total tax burden. For retirement income: SS exempt, up to $100K pension deduction 62+. NJ has the highest property tax rate in the nation. New Jersey offers various state-specific deductions and credits that can reduce tax liability. The annual filing deadline for state income tax returns is April 15, matching the federal deadline. Taxpayers who cannot file by the deadline can request an automatic six-month extension, though any tax owed must still be paid by April 15 to avoid interest and penalty charges. Self-employed individuals, recent movers, and retirees with complex income sources should consult a qualified tax professional for personalized guidance.
Frequently Asked Questions
New Jersey has a progressive income tax with 7 brackets ranging from 1.4% on income up to $20,000 to 10.75% on income over $1 million. The state does not offer a standard deduction but provides various exemptions and credits.
No. New Jersey does not offer a standard deduction. Instead, the state provides personal exemptions of $1,000 per filer and dependent. This means more of your income is subject to NJ state tax compared to states with standard deductions.
Yes. New Jersey allows a property tax deduction of up to $15,000 on your state return. Alternatively, you can claim a property tax credit of $50 for homeowners or tenants. Given NJ's high property taxes (averaging ~2.2%), the deduction is typically more valuable.
New Jersey excludes a portion of retirement income from taxation. Taxpayers 62 or older with gross income of $150,000 or less can exclude up to $100,000 in retirement income (pensions, annuities, IRA withdrawals). Social Security benefits are not taxed by New Jersey.
New Jersey offers its own EITC equal to 40% of the federal EITC. This is one of the most generous state EITCs in the country. If your federal EITC is $3,000, your NJ EITC would be $1,200.
New Jersey state tax returns are due April 15, matching the federal deadline. An automatic 6-month extension is available by filing Form NJ-630.
New Jersey uses 1.4-10.75% progressive (7 brackets) system. The standard deduction is None (exemptions only).
SS exempt, up to $100K pension deduction 62+
