New Jersey Tax Rate Codes A, B, C and D: Choosing the Right Letter

The New Jersey tax rate codes A, B, C, D, and E tell you which rate table applies to your situation. A and B do double duty: they name the two income tax bracket schedules on the NJ-1040 and they also name two of the withholding rates your employer uses on your paycheck. C, D, and E exist only for withholding, and only for households where more than one paycheck or income source is in play. Picking the wrong letter can leave you overwithheld every pay period or facing a surprise balance in April.

What Each Letter Does

The letters show up in two different places, which is where most of the confusion starts.

On your income tax return, only A and B exist. Tax Rate Schedule A is the bracket table for single filers, married or civil union partners filing separately, and estates and trusts. Tax Rate Schedule B is the bracket table for joint filers, heads of household, and qualifying surviving spouses or civil union partners.

On the NJ-W4 you give your employer, all five letters exist. A and B are the withholding versions of the same schedules, set slightly higher than the income tax rates so you don’t come up short at filing. C, D, and E are progressively higher withholding tiers pulled from the NJ-W4 Wage Chart, and they have no equivalent on the return itself.¹

One quirk worth knowing up front: if Line 3 of your NJ-W4 is left blank, your employer defaults to Rate B regardless of your actual filing status.¹

Rate A: Single and Married Filing Separately

If you file as single, as a married or civil union partner filing separately, or you’re an estate or trust, your New Jersey income tax is calculated under Tax Rate Schedule A. The brackets have not changed since 2020 and remain the same for 2026:²

Up to $20,000: 1.4% of taxable income
$20,001 to $35,000: $280 plus 1.75% of the amount over $20,000
$35,001 to $40,000: $542.50 plus 3.5% of the amount over $35,000
$40,001 to $75,000: $717.50 plus 5.525% of the amount over $40,000
$75,001 to $500,000: $2,651.25 plus 6.37% of the amount over $75,000
$500,001 to $1,000,000: $29,723.75 plus 8.97% of the amount over $500,000
Over $1,000,000: $74,573.75 plus 10.75% of the amount over $1,000,000

The rate jumps from 1.75% to 3.5% at $35,000. For a single filer earning $50,000, the effective rate lands near 2.3% because most of the income sits in the two lowest brackets. The top 10.75% rate applies only to dollars above $1 million.

Rate B: Joint, Head of Household, and Surviving Spouse

Joint filers, heads of household, and qualifying surviving spouses or civil union partners use Tax Rate Schedule B. The brackets are wider in the middle to reflect combined household income:²

Up to $20,000: 1.4% of taxable income
$20,001 to $50,000: $280 plus 1.75% of the amount over $20,000
$50,001 to $70,000: $805 plus 2.45% of the amount over $50,000
$70,001 to $80,000: $1,295.50 plus 3.5% of the amount over $70,000
$80,001 to $150,000: $1,645 plus 5.525% of the amount over $80,000
$150,001 to $500,000: $5,512.50 plus 6.37% of the amount over $150,000
$500,001 to $1,000,000: $27,807.50 plus 8.97% of the amount over $500,000
Over $1,000,000: $72,657.50 plus 10.75% of the amount over $1,000,000

Compare this with Schedule A. The 1.75% band runs to $50,000 here instead of $35,000. The 5.525% band doesn’t start until $80,000 rather than $40,000. A married couple earning $100,000 jointly owes noticeably less than two single filers each earning $50,000.

How A and B Work as Withholding

Your employer uses the same letters, but the withholding tables are set slightly above the income tax rates so most filers land near even at tax time. The lowest bracket withholds at 1.5% on annualized income up to $20,000, versus the 1.4% income tax rate. At the top, withholding reaches 11.8% on income over $1 million, versus the 10.75% income tax rate.³

Which table your employer applies comes straight from your NJ-W4:

Filing status 1 (single) or 3 (married/civil union filing separately): Rate A
Filing status 2 (joint), 4 (head of household), or 5 (qualifying surviving spouse/civil union partner): Rate B, unless the Wage Chart bumps you to C, D, or E
Line 3 left blank: Rate B, no matter your actual status

Rates C, D, and E: The Wage Chart

Rate B alone often isn’t enough when a household has two earners or significant outside wages. Each employer withholds as if its paycheck is the household’s only income, so the combined tax bill ends up higher than the sum of what both employers took out. Rates C, D, and E close that gap by raising the withholding rate based on total household wages.

The Wage Chart applies only to filers who marked status 2, 4, or 5 on the NJ-W4. Single filers and those filing separately don’t use it.¹ To find your letter:

Locate your own wage amount in the left column.
Find the total of all other household wages, including a spouse’s or civil union partner’s, along the top row.
The intersection gives you your letter: A, B, C, D, or E.

The letters run in ascending order of withholding. Rate E takes the most out of each paycheck and is used for the highest combined income situations. The tradeoff is straightforward. A higher letter means less take-home now and a smaller balance (or a refund) at filing. A lower letter leaves more in each paycheck and risks an underpayment when you file.

If your household income shifts substantially during the year, submit a new NJ-W4 with the updated letter. This matters most when a spouse or civil union partner starts or stops working, because the letter you first picked may no longer match what the household actually earns.¹

How to Choose the Right Letter

Your filing status decides whether you’re on the A track or the B track, so start there. New Jersey generally follows the same filing status you use on your federal return.⁴

Single: Schedule A, withholding Rate A
Married or civil union partner filing jointly: Schedule B, withholding Rate B, C, D, or E
Married or civil union partner filing separately: Schedule A, withholding Rate A
Head of household: Schedule B, withholding Rate B, C, D, or E
Qualifying surviving spouse or civil union partner: Schedule B, withholding Rate B, C, D, or E

Civil union partners get the same treatment as married couples under New Jersey tax law. Head of household requires that you are unmarried or considered unmarried, paid more than half the cost of keeping up your home for the year, and had a qualifying dependent living with you. Claiming head of household when you don’t qualify gets reclassified to single, which shifts you from Schedule B’s wider brackets to Schedule A’s narrower ones and can produce a balance owed.

If you’re a single earner in a single-income household, Rate A (or Rate B, depending on status) usually gets you close. If you’re one of two earners, or you have an employed spouse plus significant outside wages, walk through the Wage Chart. Picking B when C or D is the right answer is the most common source of underwithholding for two-earner households.

When the Right Letter Still Leaves You Owing

Withholding codes only cover wages your employer sees. Income from freelancing, rentals, investments, and retirement distributions runs outside that system. If you expect to owe $400 or more after subtracting withholding and credits, New Jersey requires quarterly estimated tax payments.⁵

For the 2026 tax year, quarterly due dates are April 15, June 15, and September 15 of 2026, plus January 15, 2027. You can skip the January payment if you file your return and pay the full balance by January 31, 2027.

To avoid an underpayment penalty, pay at least the smaller of 80% of your current-year tax or 100% of last year’s tax. If your prior-year gross income was over $150,000 (or $75,000 if married filing separately), the prior-year safe harbor rises to 110%.⁵ Fall short and the state charges interest at 10% annually for 2026, calculated as the prime rate plus 3%, compounded annually.⁶

1
State of New Jersey – Division of Taxation. Employee’s Withholding Allowance Certificate
2
Justia. New Jersey Code 54A:2-1 – Imposition of Tax
3
State of New Jersey Department of the Treasury. Tables for Percentage Method of Withholding
4
NJ Division of Taxation. NJ Division of Taxation – Filing Status
5
NJ Division of Taxation. NJ Division of Taxation – Notice on Estimated Tax Payments
6
State of New Jersey – Department of the Treasury. Interest Rate Assessed on Tax Balances