New Jersey Income Tax Calculator

Taxes in New Jersey

New Jersey State Tax Quick Facts

• Income tax: 1.40% - 10.75%
• Sales tax: 0% - 2%
• Property tax: 2.26% average effective rate
• Gas tax: 42.10 cents per gallon of regular gasoline, 49.40 cents per gallon of diesel

The Garden State has a lot of things going for it, but low taxes are not among its virtues. Homeowners in New Jersey pay an average of $8,796 in property taxes annually, which equals an effective property tax rate of 2.26%, the highest in the nation. The state’s income tax ranges from 1.40% up to 10.75%, one of the highest top rates in the country.

Of course, if you don’t own a home or if your income places you in one of New Jersey’s lower tax brackets, the picture may not be so bleak. New Jersey’s sales tax rate is relatively close to the national average.

A financial advisor can help you understand how taxes fit into your overall financial goals. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

New Jersey Income Taxes

New Jersey’s income tax is structured similarly to the federal income tax. Rates are based on income tax brackets, with income within each bracket being taxed at the corresponding rate. The table below shows brackets and rates for filers in New Jersey.

All of the rates above apply to New Jersey taxable income, which is total income (including capital gains) minus certain deductions, as well as the New Jersey personal exemption of $1,000. Some forms of income that are not taxable include unemployment compensation, Social Security benefits, workers’ compensation and lottery winnings of $10,000 or less. Expenses that may be deducted in New Jersey include certain unreimbursed medical expenses, New Jersey property taxes, Archer MSA contributions and, if you're self-employed, health insurance payments.

New Jersey Sales Tax

New Jersey has a single, statewide sales tax rate. On Jan. 1, 2018, that rate decreased from 6.875% to 6.625%. The flat sales tax rate means you will pay the same rate wherever you are in the state, with two exceptions. First, there are New Jersey’s “Urban Enterprise Zones,” where purchases made at qualified businesses (typically retailers) face a reduced sales tax rate of 3.3125%. As of May 30, 2018, there are nearly 40 Urban Enterprise Zones in New Jersey, including parts of Newark, Trenton, Camden and more.

The other exception to New Jersey’s state sales tax is Salem County. In Salem County, nearly all purchases are also subject to a reduced sales tax rate of 3.3125%. The only items that do not get that reduced rate are alcoholic beverages, cigarettes, motor vehicles, services and any transactions made from outside the county.

Outside of those exceptions, the statewide sales tax rate applies to most products and services, including electronics, furniture, fitness club memberships, parking, landscaping services and digital property (e.g. electronically downloaded music, videos, software, etc.). Some items, however, are exempt. Groceries, prescription and over-the-counter drugs and most types of clothing and footwear are all exempt.

New Jersey Property Tax

New Jersey has the highest property taxes in the country. The average effective property tax rate is 2.26%, which means that, on average, homeowners in New Jersey pay almost 2.50% of their home value in property taxes each year.

In nearly half of New Jersey’s counties, real estate taxes for the average homeowner are more than $8,000 annually. In Bergen and Essex Counties, west of New York City, the average annual property tax bill is over $10,000. As mentioned above, property taxes are usually tax deductible on your New Jersey income tax return. Starting with tax year 2018, you can now deduct up to $15,000 of property taxes. Prior to 2018, the maximum property tax deduction was $10,000.

If you are looking to purchase a property in the Garden State or refinance one, take a look at our New Jersey mortgage guide for details about getting a mortgage in the state. You can also calculate your property taxes with our New Jersey property tax calculator.

New Jersey Inheritance and Estate Tax

New Jersey has an inheritance tax. The inheritance tax rate ranges from 11% to 16% and applies only to beneficiaries who are not one of the following in relation to the decedent: mother, father, grandparent, spouse, civil union partner, child, grandchild, great-grandchild, stepchild or domestic partner. Meanwhile, siblings, close friends or step-parents would all be required to pay the inheritance tax, although the first $25,000 of the inheritance is exempt. Anyone outside of these categories will not receive an exemption.

New Jersey has recently phased out its estate tax. As of Jan. 1, 2018, the New Jersey Estate Tax will no longer be imposed on anyone dying on or after that date.

New Jersey Capital Gains Tax

Capital gains are taxable in the state of New Jersey. They are treated as regular income and, in combination with other income, they are taxed at the rates in the tables above.

New Jersey Cigarette Tax

New Jersey collects taxes of $2.70 per pack of 20 cigarettes.

• During the Revolutionary War, nearly 300 engagements took place in New Jersey, more than in any other state.
• New Jersey was the first state to sign the Bill of Rights.