How Much Is Capital Gains Tax in NJ? Rates, Brackets, and Exemptions

Capital gains tax in NJ is charged at the same graduated rates as ordinary income, running from 1.4% on the lowest incomes up to 10.75% on income above $1 million.¹ New Jersey draws no distinction between short-term and long-term gains, so an asset you held for twenty years is taxed on the same schedule as one you held for six months. What you actually owe depends on your filing status, your total income for the year, and whether any exclusions apply to the sale.

How New Jersey Treats a Capital Gain

Under the Gross Income Tax Act, “net gains or net income from disposition of property” is one of the categories that make up your New Jersey gross income.² Profit from selling stocks, bonds, real estate, or other property lands in that category and gets added to your wages, business income, pensions, and everything else. The combined total is what puts you into a bracket. There is no reduced rate for long-term holdings the way there is federally.

New Jersey Tax Brackets for 2025

New Jersey uses a progressive structure, so only the income falling within each range is taxed at that range’s rate.¹

Single and Married Filing Separately

$0 – $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%

Married Filing Jointly and Head of Household

$0 – $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%

To see how the stacking works, take a single filer with $90,000 in total gross income that includes a capital gain. That filer pays 1.4% on the first $20,000, 1.75% on the next $15,000, 3.5% on the next $5,000, 5.525% on the next $35,000, and 6.37% on the final $15,000. Only the top slice sits in the highest bracket the filer reaches.

Federal Tax Comes on Top

Whatever New Jersey collects is on top of what you owe the IRS. Federal long-term gains (assets held more than a year) are taxed at 0%, 15%, or 20% based on taxable income; short-term gains follow ordinary federal rates. Higher earners may also pay the 3.8% net investment income tax. Because New Jersey has no long-term preference, a resident in the top state bracket selling a long-held asset can face a combined federal and state rate above 30%.

Figuring the Gain You Actually Owe Tax On

New Jersey starts with the same gain figure you report on your federal return.³ The formula is straightforward: sale price, minus cost basis, minus selling expenses. The tax rate matters less than most people think if the basis is calculated correctly, because a higher basis produces a smaller gain.

Purchased Property

Basis begins with what you paid. For real estate, you can add the cost of capital improvements like a new roof, a kitchen remodel, or an addition, because those become part of your investment. Routine maintenance and repairs do not count. Broker commissions, transfer taxes, and attorney fees at sale come off the sale price to give you your net proceeds.

Inherited or Gifted Property

New Jersey follows federal rules on basis, matching the method used on your federal return.⁴ Inherited property gets a stepped-up basis equal to its fair market value on the date of the prior owner’s death. If a parent bought a house for $150,000 and it was worth $500,000 at their death, your basis is $500,000, and only appreciation above that amount is taxed.

For gifted property, you generally inherit the donor’s original basis. If the donor paid $50,000 for stock and gifted it to you at $120,000, your basis is $50,000, and a sale at $120,000 produces a $70,000 gain. If the fair market value at the time of the gift was lower than the donor’s basis, you use that lower value when calculating a loss.

Losses Work Differently in New Jersey

This is where New Jersey diverges sharply from federal rules, and it catches people every year. Because gross income is split into categories, a capital loss can offset gains in the same category, but generally cannot reduce income in a different category like wages.

New Jersey also does not allow capital loss carryforwards. Federally, unused losses roll forward indefinitely and up to $3,000 per year can be deducted against ordinary income. New Jersey offers no equivalent. If losses exceed gains in a given year, the excess is gone for state purposes.⁵ If you have losses sitting in a portfolio and are planning a sale that will produce a gain, timing both in the same tax year is the only way to use them against each other in New Jersey.

Selling Your Home

Selling a primary residence gets special treatment. Single filers can exclude up to $250,000 of gain, and married couples filing jointly can exclude up to $500,000.⁶ The rules match the federal exclusion: you must have owned and used the home as your primary residence for at least two of the five years before the sale.

Anything above the limit is taxable. A married couple with $600,000 of profit excludes $500,000 and owes New Jersey tax on the remaining $100,000 at their bracket rate. The exclusion is for your main home only; investment properties and vacation houses do not qualify.

If you sell early because of a health change, a job relocation, or certain unforeseen circumstances, a prorated exclusion may still be available, calculated in proportion to the time you met the requirement.⁶

Non-Resident Real Estate Sales

Non-residents selling New Jersey real estate face withholding at closing. The seller files a GIT/REP-1 and pays estimated tax equal to the gain multiplied by 10.75% (the top rate), or 2% of the sale price stated in the deed, whichever is higher.⁷

Related forms cover the variations:

GIT/REP-1 is filed by non-resident sellers at closing with the estimated payment.
GIT/REP-2 is filed by non-resident sellers before closing.
GIT/REP-3 is filed by New Jersey resident sellers to certify residency or claim exemption.

The closing payment is a credit against your year-end tax. If actual tax owed comes out lower, you get the difference back as a refund.⁷

Estimated Payments After a Big Sale

A large capital gain during the year can require quarterly estimated payments. New Jersey requires them if you expect to owe more than $400 at filing.⁸ This typically hits taxpayers who sell appreciated stock or real estate midyear without any state withholding to cover the added liability.

For 2026, the quarterly due dates are April 15, 2026; June 15, 2026; September 15, 2026; and January 15, 2027. If your gain occurs after a due date has already passed, the annualized income installment method lets you adjust remaining quarters rather than owe a lump sum.⁸

Missing payments or underreporting a gain triggers interest and penalties. For 2026, New Jersey charges 10% annual interest on unpaid balances, calculated as the 7% federal prime rate plus 3%, compounded annually, with separate penalties possible for late filing, late payment, or substantial underpayment.⁹ Keeping records of basis, improvements, and selling expenses, and paying estimated tax when a sale requires it, is what keeps the final bill limited to the tax itself.

1
Justia. New Jersey Revised Statutes Section 54A:2-1 – Imposition of Tax
2
Justia. New Jersey Revised Statutes Section 54A:5-1 – New Jersey Gross Income Defined
3
State of NJ – Department of the Treasury – Division of Taxation. Capital Gains
4
State of NJ – Department of the Treasury – Division of Taxation. Federal Tax Cuts and Jobs Act (TCJA) – Opportunity Zones
5
State of NJ – Department of the Treasury – Division of Taxation. 2025 Form NJ-1041 Instructions
6
Cornell Law School. N.J. Admin. Code 18:35-2.4 – Election to Exclude Up to $500,000 of Gain on Sale of Principal Residence
7
State of NJ – Department of the Treasury – Division of Taxation. FAQs on GIT Forms Requirements for Sale of Real Property
8
NJ.gov. 2026 NJ-1040-ES Instructions
9
NJ.gov. Interest Rates Assessed