Yes, New Jersey does have a state income tax. It is a graduated tax with rates from 1.4% on the lowest taxable income up to 10.75% on income above $1,000,000, imposed under the New Jersey Gross Income Tax Act on residents, part-year residents, nonresidents earning New Jersey-source income, and certain estates and trusts.
New Jersey Income Tax Rates and Brackets
New Jersey uses eight brackets, and the rate that applies depends on your filing status and taxable income. These brackets have been in effect for taxable years beginning on or after January 1, 2020.1NJ.gov. NJ Income Tax Rates
Single and Married Filing Separately
- Up to $20,000: 1.4%
- $20,001 – $35,000: 1.75%
- $35,001 – $40,000: 3.5%
- $40,001 – $75,000: 5.525%
- $75,001 – $500,000: 6.37%
- $500,001 – $1,000,000: 8.97%
- Over $1,000,000: 10.75%
Joint Filers, Head of Household, and Qualifying Widow(er)
- Up to $20,000: 1.4%
- $20,001 – $50,000: 1.75%
- $50,001 – $70,000: 2.45%
- $70,001 – $80,000: 3.5%
- $80,001 – $150,000: 5.525%
- $150,001 – $500,000: 6.37%
- $500,001 – $1,000,000: 8.97%
- Over $1,000,000: 10.75%
The rates are marginal. Each rate applies only to income within its bracket, not to your whole income. A single filer earning $50,000, for example, pays 1.4% on the first $20,000, 1.75% on the next $15,000, 3.5% on the next $5,000, and 5.525% on the final $10,000.
Who Has to File
You generally have to file a New Jersey return if your gross income from all sources for the year exceeds the threshold for your status:
- Single or married/civil union partner filing separately: gross income above $10,000
- Married/civil union couple filing jointly, head of household, or qualifying widow(er): gross income above $20,000
Gross income means total income from everywhere, not just New Jersey. Even if credits and exemptions wipe out your tax, crossing the threshold means the return still gets filed.2NJ.gov. Part-Year Residents
How Residency Decides What NJ Can Tax
Full-Year Residents
You are a full-year resident if your permanent home is in New Jersey for the entire tax year. The statutory resident test also treats you as a resident if you maintain a home in the state and spend more than 183 days there during the year, even when you consider another state your primary home. Full-year residents owe New Jersey tax on income from everywhere.3Justia. New Jersey Revised Statutes Section 54A 1-2 – Definitions
Part-Year Residents and Nonresidents
If you moved into or out of New Jersey during the year, you are a part-year resident. You file Form NJ-1040 for the months you lived in the state, and you may also need to file Form NJ-1040NR for any New Jersey-source income earned while you were a nonresident.2NJ.gov. Part-Year Residents Nonresidents who never lived in the state owe tax only on income from New Jersey sources, such as wages from a job located in New Jersey or profits from a business operating there.
Living in NJ and Working in PA (or Vice Versa)
New Jersey and Pennsylvania have a reciprocal tax agreement. If you live in one state and work in the other, your wages are taxed only by your home state. The agreement covers compensation — salaries, wages, tips, commissions, and bonuses — but not self-employment income, investment income, or gains from property sales. Those may still require a nonresident return in the state where they were earned.4NJ.gov. PA/NJ Reciprocal Income Tax Agreement
Military Personnel
Active-duty service members stationed in New Jersey can keep their legal residence in another state under the Servicemembers Civil Relief Act and pay state income tax only to that home state on military pay. Under the Military Spouses Residency Relief Act, a military spouse can elect to use the service member’s state of legal residence, or the spouse’s own prior residence, for state income tax purposes. Other income such as rental income earned in New Jersey may still be taxable in the state.
What Income Is Taxed
New Jersey defines gross income broadly under N.J.S.A. 54A:5-1.5Justia. New Jersey Revised Statutes Section 54A 5-1 – New Jersey Gross Income Defined The major taxable categories are:
- Wages, salaries, tips, commissions, and bonuses
- Net business or professional income
- Net gains from selling real estate, stocks, or other property
- Net rental, royalty, patent, and copyright income
- Most interest and dividend income
- Net gains distributed through estates or trusts
Full-year residents report all of these no matter where earned. Nonresidents report only New Jersey-source amounts.
Deductions, Exemptions, and Credits
New Jersey does not use the federal standard or itemized deductions. It has its own set of exemptions and credits.
Personal Exemptions
You can claim a $1,000 exemption for yourself and another $1,000 for your spouse or civil union partner on a joint return. Additional exemptions are available for dependents.6NJ.gov. NJ Division of Taxation – Income Tax – Deductions
Property Tax Deduction or Credit
Homeowners and tenants who pay New Jersey property taxes can choose between a deduction of up to $15,000 for property taxes actually paid, or a refundable $50 credit that benefits filers who owe little or no tax. The NJ-1040 instructions show which option gives the larger benefit.7NJ.gov. Property Tax Deduction/Credit for Homeowners and Renters
New Jersey Earned Income Tax Credit
If you qualify for the federal EITC, New Jersey provides a state credit equal to 40% of your federal amount. The NJEITC is refundable, so it can produce a refund even if you owe no state tax.8NJ.gov. NJ Division of Taxation – Calculate NJEITC
Child Tax Credit
Resident taxpayers with taxable income of $80,000 or less can claim a credit of up to $1,000 for each dependent child age five or younger. The credit phases down with income:
- $30,000 or less: $1,000 per child
- $30,001 – $40,000: $800 per child
- $40,001 – $50,000: $600 per child
- $50,001 – $60,000: $400 per child
- $60,001 – $80,000: $200 per child
Part-year residents get a prorated credit based on months lived in New Jersey. It is separate from, and can be claimed alongside, the Child and Dependent Care Credit.9NJ.gov. New Jersey Division of Taxation – Child Tax Credit
Retirement Income Exclusion
If you were 62 or older, or disabled under Social Security guidelines, on the last day of the tax year and your total income was $150,000 or less, you may qualify to exclude some or all pension, annuity, and IRA withdrawal income. Filers with total income of $100,000 or less can exclude a larger share. The maximum exclusion depends on filing status and is calculated on Form NJ-1040.10NJ.gov. State of NJ – Division of Taxation – Retirement Income Exclusions
Filing and Paying
Residents file Form NJ-1040. Nonresidents and part-year residents with New Jersey-source income file Form NJ-1040NR. Both forms and instruction booklets are available on the Division of Taxation website.11NJ.gov. NJ Division of Taxation – Income Tax Forms
Most taxpayers can submit returns for free through the NJ Online Filing Service, and commercial tax software integrates with the state’s e-filing system. Paper returns are still accepted by mail but take significantly longer to process.12NJ.gov. E-File Individual Income Tax Returns
For calendar-year filers, the deadline to file and pay is April 15. Balances can be paid by electronic check, credit card, or by mailing a check with Form NJ-1040-V.13NJ.gov. New Jersey Resident Return NJ-1040 Instructions
Estimated Payments
If you expect to owe more than $400 after withholdings and credits, you must make quarterly estimated payments using Form NJ-1040-ES. This typically applies to the self-employed, landlords, and anyone with substantial investment income not subject to withholding.14NJ.gov. NJ Division of Taxation – Income Tax – Estimated Payments
Penalties for Late Filing or Payment
Missing the deadline or underpaying triggers separate charges:
- Late filing penalty: 5% of the tax due for each month or partial month the return is late, up to 25%. The Division of Taxation may also charge $100 for each month the return is overdue.
- Late payment penalty: 5% of the unpaid tax.
- Interest: charged monthly on any unpaid balance at the prime rate plus 3%, compounded annually. At year-end, unpaid tax, penalties, and accrued interest roll into the balance used to calculate future interest.
The Division of Taxation can waive penalties if you show reasonable cause for the delay, but interest generally continues to accrue.15NJ.gov. When to File and Pay
Health Coverage and Your NJ Return
New Jersey requires residents to maintain minimum essential health coverage throughout the year. If you go without qualifying coverage and have no exemption, such as a financial hardship or a short coverage gap, you owe a Shared Responsibility Payment when you file. The penalty is based on household income and family size, capped at the average annual premium for a bronze-level health plan in the state. For the 2025 tax year, the individual penalty ranges from a minimum of $695 to a maximum of $4,908, with higher amounts for larger households at higher incomes.16NJ.gov. NJ Health Insurance Mandate – Shared Responsibility Payment