If you usually put off doing your taxes because you get overwhelmed by all the rules, forms, and math you have to deal with, you should try our New Jersey income tax calculator!
This free and easy tool will alleviate a lot of the stress that’s usually associated with tax season. Plus, it will help you ensure that you do everything by-the-book so you can avoid those hefty fines that are charged for filing or paying your state taxes incorrectly.
In addition to federal income taxes, you’re responsible for paying taxes to your state. The funds collected from state taxes are essential for maintaining important programs and projects that you benefit from as a resident of the Garden State. Some of the most important taxes you should be aware of if you’re filing in New Jersey are:
New Jersey State Taxes: Quick Facts
Income tax: 1.4% - 10.75%
Sales tax: 6.625%
Property tax: 2.16%
Like many other Northeastern states (looking at you New York and Illinois), taxes in New Jersey are some of the highest in the country. However, the higher taxes are part of what allows for a great quality of life that makes most New Jersey residents beam with pride. In fact, the state has been able to honor their commitment to allocating a larger budget toward schools including community colleges, transit, pensions for government workers, and larger property tax rebates for home-owners.
Annual 2019 Tax Burden ($75,000/yr income)
Total Estimated Tax Burden
Remaining Income = $64,820
At the end of the day, New Jersey’s state income taxes are actually putting your hard-earned money to good use.
New Jersey State Tax Brackets
Like the federal government, New Jersey has a graduated income tax rate. In more clear terms, your income level determines your New Jersey income tax rate. This means that the more money you make, the higher taxes you will pay. The New Jersey tax bracket you fall into also depends on your filing status.
While there are only seven tax brackets for federal income taxes and Garden State filers who file as single, married filing separately, or CU partner filing separately, there are eight New Jersey tax brackets for those who file as married filing jointly, head of household, qualifying widow(er), or surviving CU (civil union) partner.
For Single or Married/CU Partner Filing Separately:
$0 - $20,000
$20,000 - $35,000
$35,000 - $40,000
$40,000 - $75,000
$75,000 - $500,000
$500,000 - $5,000,000
For Married Filing Jointly, Head of Household, Qualifying Widow(er), or Surviving CU Partner:
$0 - $20,000
$20,000 - $50,000
$50,000 - $70,000
$70,000 - $80,000
$80,000 - $150,000
$150,000 - $500,000
$500,000.00 - $5,000,000
If you’re self-employed (a freelancer, sole proprietorship, etc.), you must also pay taxes on your income. Since there is no employer withholding income and paying a portion of FICA (payroll) taxes on your behalf, that responsibility falls to you.
As of 2019, self-employed taxpayers are required to pay FICA taxes at a rate of:
15.3% on the first $132,900 made from your business
2.9% on income above $132,900 for the Medicare tax
0.9% for income that meets “high wage earner” thresholds for the Medicare Tax
While this may seem like a lot of money, don’t worry—there are a lot of deductions that are made to properly account for your expenses, losses, and other factors.
New Jersey Personal Income Tax
New Jersey has some of the highest income taxes in the U.S. and nearly everyone who earns an income in the state is required to pay them including full-time residents, part-year residents, and non-residents. You’ll pay New Jersey personal income taxes if:
You’re filing as single or married/CU partner filing separately and made more than $10,000 in the past year.
You’re filing as married/CU filing a joint return, head of household, or qualifying widow(er)/surviving CU partner, and made over $20,000 in the past year.
However, if you made less than the threshold that applies to you, you may be eligible for a tax refund.
Our pros make filing income tax a breeze, Give us a call!
Capital gains tax is applied to the profit made off the sale of assets. Some common assets that are subject to the capital gains tax include stocks, bonds, and real estate. To determine whether you’re reporting a capital gain or loss, you subtract the cost basis (the amount you paid) from the sale price of the asset.
Short-term capital gains, those that you held for less than a year, are taxed as ordinary income. This means that short-term capital gains are taxed at the rate for your income tax bracket.
On the other hand, long-term capital gains are taxed at a rate between 0-20%. The capital gains tax rate depends on your taxable income and filing status. So, to take advantage of generally lower tax rates, it’s recommended that you hold onto your investments for longer.
You must report capital gains or losses in the year you sell the asset. Certain capital gains are exempt, including those from a New Jersey Qualified Investment Fund, such as U.S. savings bonds. To determine whether your assets are exempt from the capital gains tax, review Bulletin GIT-5.
If you have a large number of investments that you sold-off in the last year, it may be to your advantage to work with a tax expert when filing. This can ensure that you properly attribute all of your capital gains and losses as well as any related deductions or exemptions you may qualify for.
New Jersey State Sales Tax
The statewide sales tax in New Jersey is 6.625%. However, Urban Enterprise Zones, UEZ-impacted business districts, and Salem County are an exception. In these locations, certain items may be taxed at only 50% of the state tax rate which is 3.3125%. Others can even be purchased with no sales tax. The sales tax is lower in these areas as an incentive for business development.
Sales taxes are enforced to garner tax revenue for the state from goods and services purchased by taxpayers. So, how do sales taxes affect you? While retailers are responsible for these taxes directly, they’re usually passed onto the consumer in the sales price. That means you’ll pay them on most items that you purchase.
Basically the more you spend shopping both in-store and online, the more sales taxes you’ll pay.
New Jersey Excise Taxes
In addition to the 6.625% statewide sales tax, a fee known as an excise tax is charged for certain goods and activities. In general, excise taxes are levied on goods or services that are not necessary and contribute to infrastructure or social costs.
For certain products, like alcohol and cigarettes, these are known as “sin taxes” because they have a negative effect on the health or well-being of the use when consumed in large quantities. Here are some of the most notable excise taxes that affect Garden State taxpayers:
Virtually all types of alcohol are subject to excise taxes, even those that have low alcohol content. For instance, an excise tax is charged per gallon at $0.12 for beer, $0.15 for apple cider, and $0.88 for wine. Like your drinks a little stronger? It’ll cost you—liquor is taxed at an additional $5.50 per gallon.
While alcohol excise taxes aren’t likely to make a big impact on your bar tab in one night, they can add up over the year if you drink frequently.
Tobacco Excise Tax
In addition to the statewide sales tax, tobacco products are charged an extra 30% tax on the wholesale price, plus individual sin tax charges. This includes cigarettes which are subject to $2.70 in taxes for every pack, an additional $0.10 per milliliter of liquid nicotine (for E-cigs), and $0.75 per ounce for moist snuff.
If you drive a lot, you may feel the impact of the gasoline excise tax. Regular gasoline is subject to an additional $0.31 per gallon. Diesel is slightly higher at $0.35 per gallon. If you think about it, that’s more than $3.00 extra in taxes every time you fill up.
Ride-Share Excise Tax
If you frequently use ride share services like Lyft and Uber, you should know that they’re subject to an excise tax too. For solo rides, it’s an extra $0.50 and $0.25 for shared rides. While this is a small fee in the grand scheme of things, it can add up if you rely on ride-sharing instead of driving.
Short-Term Rentals Excise Tax
If you’re thinking of renting an Airbnb or other short-term rental, you should be aware that there is a 5%occupancy fee that’s now charged for reservations that are less than 89 nights. This fee is slightly lower in certain cities including Atlantic City and Wildwoods where it’s only 1% and 3.15% respectively.
Retailers are responsible for paying these taxes to the state. However, they usually wrap them in the sales price of the goods and services. So, even though you don’t see them listed out on your receipt like sales tax, you’re still paying them.
New Jersey Insurance Tax
As of 2019, taxpayers are still required to have health insurance in New Jersey. If you fail to get coverage, you will be subject to a Shared Responsibility Payment. However, there are some exemptions that will wave the penalty including financial hardship and lack of affordable plan options.
New Jersey State Property Tax
New Jersey has the highest property taxes of all 50 states. On average, New Jersey residents’ property tax bills were about $8,767 in 2018. With median home values of $334,900, the 6th highest in the nation, the current effective property tax rate is 2.16% and it seems like it will only keep going up in the near future.
Residents living in Tavistock Boro paid the most with an average property tax bill of $31,751 in 2018. Walpack Township residents had the lowest property taxes with an average 2018 property tax bill of $450.
In the state of New Jersey, property taxes are based on the market value, or how much someone would pay for your home. This is one of the reasons property tax bills are higher. While Michigan also uses market value to establish property taxes, many states like Colorado and Georgia, use the assessed value for lower tax rates.
Property Tax Relief
While property taxes are notoriously high in New Jersey, there are some instances where property tax relief is available to residents including the Senior Freeze Program which provides reimbursement on the increase of property taxes or mobile park site fees.
You may qualify for an exemption, deduction, or deferment if you are disabled, a surviving spouse of a veteran, or are currently converting property. If you believe you might be eligible for tax relief, review the available local property tax forms.
Note: If you are required to pay inheritance taxes, you will need to file Form IT-R.
New Jersey State Tax Credits
New Jersey offers several tax credits that can directly lower your tax bill. While the Child Tax Credit (CTC) is not one of them, New Jersey offers:
Child and Dependent Care Tax Credit (CDCTC) - This credit is available for households earning less than $60,000 who are responsible for caring for a child or dependent. The maximum amount for this credit is $500 for one child dependent and $1,000 for two or more children or dependents.
Credit for Taxes Paid to Other Jurisdictions - If you paid taxes on the same income to two jurisdictions (not including the federal government, Canada, Puerto Rico, or any other foreign country or territory), you may be eligible for this tax credit.
Excess UI/WF/SWF, DI, or FLI - You may be able to claim this credit if you had two or more employers and contributed more than the maximum amounts for unemployment insurance (UI)/workforce development partnership fund (WF)/supplemental workforce fund (SWF) contributions, disability insurance (DI) contributions, and/or family leave insurance (FLI) contributions.
Property Tax Credit - Homeowners and tenants can take advantage of this $50 credit.
In addition to these credits, the Earned Income Tax Credit is likely of most interest to New Jersey taxpayers.
Earned Income Tax Credit (EITC)
Like the federal government, New Jersey offers an EITC for low-to-moderate-income workers. Your eligibility for the New Jersey EITC depends on your filing status, income level, and number of children you have, if any. If you do not have a child, you must be between 25- and 65-years-old to qualify for this credit.
Filing Status - Qualifying Children Claimed
3 or More
Single, Head of Household or Widowed
Married Filing Jointly
As of 2018, the maximum credit amounts are:
$2,379 with three or more qualifying children
$2,115 with two qualifying children
$1,281 with one qualifying child
$192 with no qualifying children
Note: You must also be a resident of the state of New Jersey and have a valid Social Security number to be eligible for the EITC.
New Jersey State Tax Exemptions and Deductions
So what’s the difference between a credit and a deduction? Unlike a credit, a deduction does not directly lower your tax bill. Instead, a deduction reduces your taxable income. So, claiming one or more deductions will still mean you’ll owe less.
New Jersey Standard Deduction
If you claimed the standard deduction on your federal income taxes, you must use the standard deduction for New Jersey, known as the State and Local Tax (SALT) Deduction. To determine your deduction allowance, use the table below:
New Jersey Itemized Deductions
If you’re going to claim itemized deductions, here are the some of the deductions New Jersey allows:
Archer MSA Contributions - If you have a tax-exempt trust or custodial account, you could qualify for deduction for Archer MSA contributions.
Conservation Contributions - Taxpayers who contributions for conservation purposes of a qualified purpose in New Jersey may be able to write it off.
Health Enterprise Zone Deduction - If your dental or medical practice operates within five miles of a designated Health Enterprise Zone (HEZ), you might be eligible for a deduction of a percentage of your net income.
Medical Expenses - This could include dental, vision, urgent care, and more. However, you cannot deduct medical expenses that you were already reimbursed for and you can only claim expenses that exceed 2% of your income.
Self-Employed Health Insurance - If you paid health insurance for yourself, your spouse/CU partner, or dependents and were self-employed, you might be able to deduct the amount you paid this year.
As previously mentioned, there is also a property tax deduction that can significantly benefit homeowners. As a property owner, you can deduct the larger of the total property taxes you paid this year or $15,000. Renters can also benefit from this deduction by subtracting 18% of the rent you paid in the last year.
New Jersey Tax Exemptions
Exemptions also provide relief on your taxes because the exclude certain income from taxation. Some of the most relevant exemptions to keep in mind when filing your New Jersey state taxes include:
Social Security benefits
Permanent or temporary disability benefits
Child support payments
Qualifying scholarships or fellowship grants
Life insurance proceeds received because of a person’s death
Cancellation of debt
Amounts paid as reparations or restitution to Nazi Holocaust victims
It’s worth the time to investigate if you think you might qualify for one or more of these deductions or exemptions so you can keep more of the money you’ve earned.
Discover more deductions -- speak to a tax pro today!
When it comes time to calculate your New Jersey tax refund, don’t allow yourself to get buried in all the different aspects of filing taxes! Millions of people struggle to complete their taxes every year but with our expert tax filing tips, you’ll find it easier than ever:
Use our New Jersey income tax calculator to get an estimate of what might owe. You might even discover that you’re likely to get a refund.
Double check all of your inputs and totals to ensure you used the correct information on your return.
With the help of Community Tax, tax season stress is a thing of the past.
How to Pay New Jersey Taxes
For your convenience, there are several ways to pay your New Jersey taxes:
If you’re going to mail your return, what you need to include and where you send it will depend on several factors including whether you’re making a payment and if you’re a resident or not. Refer to the state website to determine where you should mail your return.
Estimated Tax Payments
If you believe that you will owe more than $400 in taxes, you should make estimated payments either in one lump-sum on April 15th or in four equal payments. If you’re making four equal payments in 2019, you will need to do so by these dates:
First installment: April 15th
Second installment: June 17th
Third installment: September 16th
Fourth installment: January 15th, 2020
It is important to note that these dates change slightly each year. If you don’t think you’ll be able to pay or file your state tax in New Jersey on time, it is recommended that you request an extension to file or get approval for a payment plan in a timely manner to avoid hefty penalties.
Fallen behind on state taxes? Get help with tax resolution today!
New Jersey has some state taxes that you might not find in other states:
Summary of Federal Taxes
Before filing your New Jersey income taxes, you will need to file your federal income taxes. The deadline for federal individual tax returns is April 15th.
While there are many similarities between the filing processes, keep in mind that many of the details for your federal taxes are very different from New Jersey state taxes including your income tax bracket.
Summary of Federal Taxes
Remember that New Jersey state taxes are separate from federal state taxes, and that the New Jersey tax brackets are different at a state level.
Call us to stress less and save more on your federal tax refund.
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