State Taxes at a Glance – New Jersey
|Type of Tax||2023|
|Individual Rates||1.40% to 10.75%|
|Corporate / Business Tax Rates||6.50% to 11.50%|
|Gross Receipts Tax||None|
|Sales Tax||6.60% (average)|
|Property Taxes||2.21% as a percentage of primary home|
|Estate or Inheritance Tax||Yes – Inheritance Tax|
State Income Taxes in New Jersey
The state of New Jersey is the worst state in the union regarding income tax (even behind California.) Like most states with income tax, it is calculated on a marginal scale, with seven (7) tax brackets. New Jersey Income Tax Rates range from 1.40% to 10.75%. The highest bracket of 10.75% starts for income greater than $1 Million.
State Business Taxes in New Jersey
The state of New Jersey has a Corporate Tax rate with four (4) tax brackets. They range from 6.50% to 11.50%. The highest tax bracket starts at income over $1 Million. Unlike most tax brackets, where the tax rate is based on a gradual rate. In New Jersey, the tax rate is based on the entire net income.
Corporate Tax is only assessed on C Corporation. Other flow-thru entities, such as S-Corps, LLCs and LLPs are not subject to the Corporate Tax, rather they are subject to the individual owner’s individual income tax.
Sales and Property Taxes in New Jersey
Like many states, New Jersey has multiple tax rates. One at the state level and another at the local level. The state rate is 6.63% the average local rate is -0.03%* (total average rate for New Jersey Sales Tax is 6.60%).
Note* that some jurisdictions are not subject to a state rate, and instead collect a higher local rate of 3.30%, bringing the average local rate to be negative.
Property Taxes in New Jersey – the average property tax rate for residential property in the state of New Jersey is 2.21%, which is the highest in the union as far as Property Tax as a Percent of a taxpayer’s main home.
Inheritance Taxes in New Jersey
New Jersey is one of only six (6) states that requires beneficiaries to pay taxes on inheritance. Depending on who the heir is, the tax rate ranges from 0%-16%.
|Spouses, Parents, Children, Grandparents||100% Exempt||None|
|Siblings||First $25,000 exempt||11-16%|
|Charities, Religious Institutions, Educational Institutions||100% Exempt||None|
New Jersey is one of only six (6) states that has an inheritance tax. Depending on the type (or class) of beneficiary, you could be assessed inheritance tax. A few important points:
- The first $1,000,000 is exempt from tax.
- If you are a direct beneficiary (spouse, parents, grandparents, children, grandchildren, etc.) or a charity you will owe no tax.
- However, some beneficiaries (e.g., brothers, sisters, etc.) may be subject to the tax.
- If you are subject to the tax, it can range from 11% – 16% depending on your class.
Learn more about New Jersey’s inheritance taxes in the links below:
New Jersey DMV fees
New Jersey’s DMV fees are based on weight, and not the value of the vehicle. Therefore, they are not deductible on your Federal Tax Return. If you would like to learn more about New Jerseys’ DMV fees, here is a link.
New Jersey Domicile
If you maintain a permanent place of abode for over 183 days, you are considered a New Jersey resident.
New Jersey Tax on Social Security Benefits
New Jersey does not assess state income tax on Social Security Benefits.
Payroll taxes in New Jersey
Payroll (Unemployment Insurance) taxes are paid by business on the behalf of their employees to fund unemployment insurance to the state. It consists of multiple factors. Below is an outline of the most common ones in New Jersey –
- Wage Base – New Jersey’s wage base is $41,100 (which is high)
- New Employers – UI Contribution Tax is 2.68% for all new employers.
- Disability and Workforce Fund – New employers must also fund DI and WF Funds for an additional 0.62%
- Employee SUI Contribution Rate – 0.425%
- UI Rates – range from 0.40% to 5.40%
Payroll taxes in Newark
Newark Local income tax – If you live or work in the City of Newark, the is an additional local income tax imposed on you through a Payroll Tax of 1.00%
New Jersey Business Entities – LLCs
New Jersey has an average cost of opening an LLC. Here are some important facts:
- New Jersey’s annual LLC fee is $75 a year
- When you register with the state, you pay a one time fee of $125
- Secretary of State of New Jersey – click here
New Jersey Tax Contact Phone Numbers
Important phone numbers for the New Jersey Department of Taxation:
- Website: www.state.nj.us/treasury/taxation
- Phone# for Individuals – (609) 292-6400
- Phone# for Businesses – Same