New Jersey has a state income tax, and it applies to most residents and workers

Yes, New Jersey charges state income tax. The state taxes wages, salaries, interest, dividends, and other income sources. If you live in New Jersey or work there, you will owe state income tax on most types of income, with some exceptions. The tax rate depends on your income level and filing status — New Jersey uses a progressive tax system with rates that increase as your income rises.

New Jersey residents must file a state income tax return with the New Jersey Division of Taxation if their income exceeds the filing threshold for their situation. Non-residents who work in New Jersey may also owe state tax on income earned within the state, though they may be able to claim a credit on their home state's return to avoid double taxation.

Key Takeaways

  • New Jersey imposes state income tax on residents and non-residents who earn income in the state, with tax rates ranging from 1.4% to 10.75% depending on income level.
  • You must file a New Jersey state income tax return if your income exceeds the filing threshold, which varies by age, filing status, and type of income.
  • Certain types of income are exempt from New Jersey state tax, including Social Security benefits, pension income from out-of-state sources, and some retirement account distributions.
  • If you work in New Jersey but live in another state, you may owe tax to both states, though your home state may allow a credit for taxes paid to New Jersey.
  • New Jersey offers property tax credits and earned income tax credits that can reduce your overall tax burden if you meet income and property ownership requirements.

New Jersey income tax rates and brackets for 2024

New Jersey's income tax uses seven tax brackets. The lowest rate is 1.4% on income below a certain threshold, and the highest rate is 10.75% on income above a higher threshold. The exact dollar amounts for each bracket depend on your filing status — single, married filing jointly, married filing separately, or head of household — and these thresholds change each year.

For example, a single filer in 2024 pays 1.4% on income up to $20,000, then moves into higher brackets as income increases. A married couple filing jointly has higher thresholds before entering each bracket. The New Jersey Division of Taxation publishes updated brackets each January on its website, so you should check the current year's rates when you file.

New Jersey also taxes capital gains — profit from selling stocks, real estate, or other investments — at the same rates as ordinary income. Long-term capital gains (assets held over one year) do not receive preferential treatment under state tax law, though they may under federal law.

Who must file a New Jersey state income tax return

You must file a New Jersey return if your income exceeds the filing threshold for your situation. The threshold depends on your age, filing status, and the type of income you earned. For most people under 65 with standard W-2 wages, the threshold is around $20,000 for single filers and $40,000 for married couples filing jointly, though these amounts change yearly.

If you are 65 or older, the income threshold is higher. If you are self-employed, you must file if your net self-employment income is $400 or more, regardless of your total income. If you had New Jersey income tax withheld from your paychecks, you should file even if your income is below the threshold — you may be owed a refund.

Non-residents who worked in New Jersey during the year must also file a New Jersey return on income earned in the state. You will report this income on Form NJ-1040-NR. If you lived in New Jersey for part of the year and another state for part of the year, you file as a part-year resident and report only the income earned while you were a New Jersey resident.

Types of income that are taxed and types that are not

New Jersey taxes most types of income: W-2 wages, self-employment income, interest, dividends, rental income, and capital gains. However, certain income sources are exempt. Social Security benefits are not taxed by New Jersey, even though they are taxable at the federal level. Pension income from sources outside New Jersey — such as a pension from a former employer in another state — is also exempt from New Jersey tax.

Distributions from traditional IRAs and 401(k) plans are taxed as ordinary income in New Jersey. However, if you are over 59½ and have been a New Jersey resident for at least two years, you may be able to exclude some retirement income under the Retirement Income Exclusion program. Military pay is exempt from New Jersey tax. Unemployment benefits are also exempt.

Income from New Jersey municipal bonds is exempt from New Jersey state tax (though it is still subject to federal tax). Gifts and inheritances are not taxed as income. Disability benefits from Social Security (SSDI) are not taxed by New Jersey.

How to file your New Jersey state income tax return

You can file your New Jersey return on paper or electronically. The paper form is the NJ-1040 (or NJ-1040-NR if you are a non-resident). You mail it to the New Jersey Division of Taxation along with any required schedules and supporting documents. The mailing address is on the form itself.

Electronic filing is faster and more find. You can file through a tax software provider that supports New Jersey returns, or through a tax professional. The New Jersey Division of Taxation does not offer free filing directly through its website, but it maintains a list of approved software providers. If you use a tax software package that handles federal returns, it usually handles New Jersey returns as well.

The important date to file is April 15 of the following year, the same as the federal important date. If you cannot file by April 15, you can request an extension, which gives you until October 15. An extension to file is not an extension to pay — if you owe tax, you should pay by April 15 to avoid penalties and interest, even if you have not filed yet.

Deductions and credits available to New Jersey taxpayers

New Jersey allows a standard deduction, which reduces the amount of income subject to tax. The standard deduction amount depends on your filing status and age. For 2024, the standard deduction for a single filer under 65 is around $12,000, and for married filing jointly it is around $24,000. These amounts increase each year. You can also itemize deductions if your itemized deductions exceed the standard deduction, though New Jersey does not allow a deduction for state income tax paid.

New Jersey offers several tax credits that can reduce your tax bill. The Earned Income Tax Credit (EITC) is available to low- and moderate-income workers and is based on your federal EITC. The Property Tax Credit is available to homeowners and renters with household income below a certain level — it reduces your tax liability based on property taxes paid or rent paid. The Earned Income Tax Credit and Property Tax Credit are the two most common credits for individual taxpayers.

If you have dependent children, you may be able to claim a dependent exemption, though the value is smaller than the federal dependent exemption. Some taxpayers may also be able to claim a credit for taxes paid to another state if they worked in multiple states during the year.

Non-residents and part-year residents: what you owe

If you worked in New Jersey but lived in another state for the entire year, you are a non-resident for tax purposes. You must file a New Jersey return (Form NJ-1040-NR) on income you earned in New Jersey. You report only the income earned while working in New Jersey, not income from other sources or other states.

Your home state may also tax the same income. To avoid paying tax twice on the same money, your home state may allow you to claim a credit for taxes paid to New Jersey. The credit is usually limited to the amount of tax your home state would have charged on that income. You should file returns in both states and claim the credit on your home state return.

If you moved to or from New Jersey during the year, you are a part-year resident. You report income earned while you were a New Jersey resident on the NJ-1040 form, and you may also file in your other state for income earned there. The filing important date and tax rates are the same as for full-year residents.

Frequently Asked Questions

Do I have to pay New Jersey income tax if I work there but live in Pennsylvania?

Yes, you owe New Jersey income tax on wages earned in New Jersey. You will file a non-resident return with New Jersey. Pennsylvania may also tax the same income, but Pennsylvania allows a credit for taxes paid to other states, so you should not pay tax twice. File both returns and claim the credit on your Pennsylvania return.

Is Social Security taxed in New Jersey?

No, Social Security benefits are not taxed by New Jersey. They are not included in your New Jersey taxable income, even though they may be taxable at the federal level. If Social Security is your only income, you do not need to file a New Jersey return.

What if I did not file a New Jersey tax return when I should have?

Contact the New Jersey Division of Taxation to file a late return. You may owe penalties and interest on any unpaid tax, but filing late is better than not filing. The Division can tell you whether you owe tax and what the penalties are for your specific situation.

Can I deduct state income tax paid to New Jersey on my federal return?

You can deduct state income tax paid on your federal return only if you itemize deductions on your federal return. The deduction is limited to $10,000 per year for all state and local taxes combined (SALT cap). Most taxpayers use the standard deduction instead, which is higher than their itemized deductions.

Does New Jersey tax retirement income differently than other income?

Most retirement income is taxed the same as ordinary income in New Jersey. However, if you are over 59½ and have been a New Jersey resident for at least two years, you may be able to exclude some retirement income under the Retirement Income Exclusion. Check the New Jersey Division of Taxation website or speak with a tax professional to see if you may have access to.