Taxes in NJ come in several layers: a progressive state income tax running from 1.4% to 10.75%, a 6.625% sales and use tax on most retail purchases, locally assessed property taxes that often exceed 2% of a home’s value, a Corporate Business Tax on companies doing business in the state, and an inheritance tax that applies to certain beneficiaries. The Division of Taxation administers most of these and enforces compliance.1Department of the Treasury. Division of Taxation – About Us
Income Tax
New Jersey taxes residents on all income and nonresidents on income earned from New Jersey sources. Wages, business profits, capital gains, interest, dividends, rental income, and gambling winnings are all in scope.2State of New Jersey – Division of Taxation. New Jersey Gross Income Tax – N.J.S.A. 54:A:1-1 et seq.
For a single filer, the rates climb through seven brackets:
- 1.4% on the first $20,000
- 1.75% on $20,001 to $35,000
- 3.5% on $35,001 to $40,000
- 5.525% on $40,001 to $75,000
- 6.37% on $75,001 to $500,000
- 8.97% on $500,001 to $1,000,000
- 10.75% above $1,000,000
Married couples filing jointly use slightly wider thresholds in the lower brackets, but the 10.75% top rate still begins at $1 million. Each rate applies only to the dollars inside its bracket, so moving into a higher bracket doesn’t reprice the income below the line.
Who Counts as a Resident
Residency turns on domicile. If New Jersey is your permanent home, you owe tax on all income regardless of where it was earned. If you’re domiciled elsewhere but keep a permanent home here and spend more than 183 days in the state, you’re also treated as a resident. Everyone else is a nonresident and owes tax only on New Jersey-source income, such as wages from a job physically located here.3NJ Division of Taxation. Part-Year Residents and Nonresidents – Understanding Income Tax
Sales and Use Tax
The statewide sales tax is 6.625% on most retail purchases of tangible goods, specified digital products, and certain services. Businesses collect it at the register and remit it to the state.4NJ Division of Taxation. Sales and Use Tax
Everyday clothing and footwear are exempt, as are fabric and thread bought by non-commercial buyers. The exemption doesn’t cover fur clothing, accessories, or sport and recreational equipment.5Justia. New Jersey Revised Statutes Section 54:32B-8.4 – Clothing and Footwear Exemption Most unprepared grocery food is exempt too, though prepared meals and restaurant food are taxed at the full rate.
If you buy something from an out-of-state seller that doesn’t collect New Jersey sales tax, and you use the item here, you owe 6.625% directly to the state as use tax. This covers online purchases, catalog orders, and items brought back from trips across state lines.4NJ Division of Taxation. Sales and Use Tax
Qualified retailers in designated Urban Enterprise Zones charge half the standard rate, 3.3125%, but only on in-person purchases picked up or delivered from the vendor’s location inside the zone. Mail-order and phone sales shipped elsewhere in the state are taxed at the full rate.6NJ Division of Taxation. UEZ Requirements
Property Tax
Property tax is assessed and collected locally, not by the state. It funds municipal services, county government, and school districts. The state sets the framework under N.J.S.A. 54:4-1, but each municipality sets its own rate based on budget needs.7Justia. New Jersey Revised Statutes Section 54:4-1
Local assessors value each property based on what a willing buyer would pay a willing seller. The bill equals the assessed value multiplied by the local rate. Rates vary dramatically: some shore communities sit near 1%, while parts of northern and central New Jersey exceed 2.5%. The state publishes annual general tax rate tables for every municipality.
Relief Programs and Deductions
The ANCHOR program sends direct payments to eligible homeowners and renters. For the 2025 application year, most eligible filers have their applications auto-filed and receive benefit confirmation letters, with payments starting in September 2026. Specific amounts and income limits are set each year through the state budget.8NJ Division of Taxation. Property Tax Relief Programs
The Senior Freeze program reimburses eligible seniors and disabled residents for property tax increases above a base year. It has its own income limits and application deadlines, which typically track the ANCHOR schedule.9NJ Division of Taxation. Senior Freeze – Property Tax Reimbursement
Residents 65 or older, permanently and totally disabled persons, and honorably discharged veterans each qualify for a $250 annual property tax deduction that comes directly off the tax bill. Surviving spouses of eligible individuals can also claim it.10NJ Division of Taxation. Property Tax Deduction for Senior Citizens and Disabled Persons
Corporate Business Tax
Every corporation that holds a charter or conducts business in New Jersey owes the Corporate Business Tax under N.J.S.A. 54:10A-1. It’s calculated on the portion of net income allocated to the state.11Justia. New Jersey Revised Statutes Section 54:10A-1 – Short Title
For C corporations:
- 6.5% on adjusted net income when entire net income is $50,000 or less
- 7.5% when entire net income is above $50,000 but not above $100,000
- 9% when entire net income is above $100,000
A 2.5% surtax on allocated income above $1 million had been in effect for several years but was set to expire at the end of 2025. If the legislature has not extended it again, corporations filing for privilege periods beginning in 2026 would owe only the base rates.12NJ Division of Taxation. Corporation Filing Responsibilities – Rates and Accounting Periods
Even a corporation that breaks even or loses money owes a minimum tax tied to New Jersey gross receipts: $500 under $100,000; $750 from $100,000 to $249,999; $1,000 from $250,000 to $499,999; $1,500 from $500,000 to $999,999; and $2,000 at $1,000,000 or more. Members of affiliated or controlled groups with combined payroll of $5 million or more each owe the $2,000 minimum regardless of individual receipts.12NJ Division of Taxation. Corporation Filing Responsibilities – Rates and Accounting Periods S corporations pass most income through to shareholders, who then pay personal income tax on it, but the entity still owes the minimum tax and must meet certain corporate filing requirements.
Inheritance Tax
New Jersey repealed its separate estate tax for deaths on or after January 1, 2018.13Justia. New Jersey Revised Statutes Section 54:38-1 – Imposition of Tax; Amount The inheritance tax, however, still applies, and it is charged against each beneficiary’s share based on how closely they were related to the person who died.
Class A beneficiaries pay nothing. That group includes spouses, civil union and domestic partners, children (including adopted and mutually acknowledged children), grandchildren, parents, grandparents, and stepchildren.14NJ Division of Taxation. Form O-10-C – General Information – Inheritance and Estate Tax
Class C covers brothers, sisters, and sons- or daughters-in-law. Each gets a $25,000 exemption, with rates above that running 11% on the next $1,075,000, 13% on the next $300,000, 14% on the next $300,000, and 16% on anything above $1,700,000.
Class D is everyone else: friends, unmarried partners, nieces, nephews, cousins. The rate is 15% on the first $700,000 and 16% above that, with no meaningful exemption. Beneficiary designations matter here, because leaving assets to a Class D recipient can cost close to a sixth of the inheritance.
Nonresident Real Estate Withholding
Nonresidents who sell real property in New Jersey must make an estimated tax payment at closing. Under N.J.S.A. 54A:8-8 through 8-10, the seller remits 2% of the total sale price to the Division of Taxation before or at the time the deed is recorded. The county recording officer will not accept the deed without proof of payment or of a valid exemption.15NJ Division of Taxation. Nonresident Sellers – Tax Professionals
The 2% is an estimate, not a final bill. When the seller files a New Jersey nonresident return, actual tax on any gain is figured at the standard income tax rates, and any excess withholding comes back as a refund. Sellers who meet specific exemption conditions, such as having no gain on the sale, can file Form GIT/REP-3 at closing and skip the payment.
Credits That Reduce What You Owe
New Jersey offers an Earned Income Tax Credit equal to 40% of the federal EITC. If you qualify federally, you qualify for the state version and claim it on your New Jersey return. Part-year residents prorate the credit by the number of months lived in the state, counting 15 days or more as a full month.16NJ Division of Taxation. Calculate NJEITC
Residents with New Jersey taxable income of $60,000 or less who claim the federal child and dependent care credit can also claim a state-level credit. The New Jersey amount is a percentage of the federal credit, decreasing as income rises. Legislation has been introduced to expand eligibility and raise the maximum benefit, but as of early 2026 the existing thresholds remain in effect.
Filing Deadlines and Penalties
New Jersey individual income tax returns follow the federal calendar. The 2025 return is due April 15, 2026, for calendar-year filers; if that date falls on a weekend or holiday, it shifts to the next business day. You can get an extension to file, but there is no extension to pay. Any tax owed is due by the original deadline.17NJ Division of Taxation. When to File and Pay
Missing the deadline brings two stacking penalties. A flat $100 charge accrues for each month or partial month the return is overdue, and a 5% monthly penalty applies to any unpaid balance, capped at 25% of the amount owed. A separate 5% penalty applies to any underpayment shown on the return unless you can show reasonable cause.18Justia. New Jersey Revised Statutes Section 54:49-4 – Late Filing Penalty Interest runs on top of all of it. A separate $50 penalty applies each time you fail to file or pay electronically when electronic filing is required. The fastest way to stop penalties from compounding is to file the return and pay what you can, even if you can’t cover the full balance.