Overview of New Jersey Taxes
The Garden State has a progressive income tax system. The rates, which vary depending on income level and filing status, range from 1.4% to 8.97%. The top tax rate in New Jersey is the fifth highest in the country.
This calculator reflects the 2018 federal withholding tax changes.
Click here to learn more about how the Trump Tax Plan will affect you.
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- Our Tax Expert
Jennifer Mansfield, CPA Tax
Jennifer Mansfield, CPA, JD/LLM-Tax, is a Certified Public Accountant with more than 30 years of experience providing tax advice. SmartAsset’s tax expert has a degree in Accounting and Business/Management from the University of Wyoming, as well as both a Masters in Tax Laws and a Juris Doctorate from Georgetown University Law Center. Jennifer has mostly worked in public accounting firms, including Ernst & Young and Deloitte. She is passionate about helping provide people and businesses with valuable accounting and tax advice to allow them to prosper financially. Jennifer lives in Arizona and was recently named to the Greater Tucson Leadership Program.
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 Photo credit: ©iStock.com/Henryk Sadura | New Jersey Paycheck Quick Facts
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How Your New Jersey Paycheck Works
Your New Jersey employer is responsible for withholding FICA taxes and federal income taxes from your paychecks. Medicare and Social Security taxes together make up FICA taxes. Your employer will withhold 1.45% of your wages for Medicare taxes each pay period and 6.2% in Social Security taxes. Your employer matches your Medicare and Social Security contributions, so the total payment is doubled. Any wages you earn in excess of $200,000 is subject to a 0.9% Medicare surtax, which is not matched by your company.
Federal income taxes are also going to be withheld from each of your paychecks. Your employer uses the information that you provided on your W-4 form to determine how much to withhold in federal income tax each pay period. Several factors, like your marital status, your salary, how many allowances you claim and if you opt to have additional tax withheld from your paychecks, play a role in how much is taken out from your wages for federal taxes.
Take note that withholding calculations have changed for the 2018 tax year because of President Trump’s new tax plan. The IRS released new guidelines in January and taxpayers should have seen changes to their paychecks, to reflect the new tax plan, starting in February 2018. For the time being, you do not need to fill out a new W-4. Your employer will use the withholding information on your current form.
How many allowances you can claim differs from person to person and is affected by things like if you have dependents. The more allowances you claim, the less you will have withheld in taxes and the bigger your paychecks will be. Keep in mind though, if you overclaim allowances, you run the risk of not paying enough in taxes for the entire year and being slammed with a big bill come April.
New Jersey Median Household Income
| Year | Median Household Income |
| 2016 | $73,702 |
| 2015 | $72,093 |
| 2014 | $71,919 |
| 2013 | $70,165 |
| 2012 | $69,667 |
| 2011 | $67,458 |
| 2010 | $67,681 |
| 2009 | $68,342 |
| 2008 | $70,378 |
New Jersey has a progressive income tax system, in which the tax brackets are dependent on taxpayers’ filing status and income level. New Jersey’s income tax is structured similarly to the federal income tax system. If you single or married and filing separately in New Jersey, there are six tax brackets that apply to you and they range from 1.4% on the first $20,000 of taxable income and 8.97% on income in excess of $500,000. There are seven tax brackets for married people who file jointly and the heads of household. The lowest and highest rates are also 1.4% and 8.97%. The top tax rate in New Jersey is one of the highest in the country.
If you're an employee in Newark, it’s important to know that while the city has a 1% payroll tax, it applies to employers not workers. No New Jersey cities levy local income taxes.
How You Can Affect Your New Jersey Paycheck
Most people want a bigger paycheck and you can certainly take steps toward that, like asking for a raise or working extra hours if you are eligible for overtime, but opting to receive a smaller paycheck could actually be a smart idea for you. If you elect to put more money into a pre-tax retirement account like a 401(k) and a 403(b), you will not only be saving for the future, but you will be lowering your taxable New Jersey income. The money that you put into a 401(k) or 403(b) comes out of your paycheck before taxes are applied, so by putting more money in a retirement account, you are paying less money in taxes. So, while you will receive a smaller paycheck each month, you will actually get to keep more of your salary this way.
Another reason why you might elect to receive a smaller paycheck is if you always have to pay a lot in taxes in April. If this is the case, you may be claiming too many allowances and underpaying your taxes all year. There are a couple easy fixes to this. You can claim fewer allowances on a new W-4 form or you can ask your employer to withhold a dollar amount from your paychecks, say $50. You will actually be paying the same amount in taxes, you’re just spreading out it out and paying a little more each pay period, instead of in a lump sum come tax season.
New Jersey Top Income Tax Rate
| Year | Top Income Tax Rate |
| 2017 | 8.97% |
| 2016 | 8.97% |
| 2015 | 8.97% |
| 2014 | 8.97% |
| 2013 | 8.97% |
| 2012 | 8.97% |
| 2011 | 8.97% |
| 2010 | 8.97% |
| 2009 | 10.75% |
| 2008 | 8.97% |
| 2007 | 8.97% |
| 2006 | 8.97% |
| 2005 | 8.97% |
| 2004 | 8.97% |
If you see yourself moving to the Garden State anytime soon or are planning to refinance a home loan in the state, check out our New Jersey mortgage guide for details on rates and the specifics about getting mortgages in the state.
Most Paycheck Friendly Places
SmartAsset's interactive map highlights the most paycheck friendly counties across the country. Zoom between states and the national map to see data points for each region, or look specifically at one of the four factors driving our analysis: Semi-Monthly Paycheck, Purchasing Power, Unemployment Rate, and Income Growth.
Methodology Our study aims to find the most paycheck friendly places in the country. These are places in the country with favorable economic conditions where you get to keep more of the money you make. To find these places we considered four different factors: semi-monthly paycheck, purchasing power, unemployment rate and income growth.
First, we calculated the semi-monthly paycheck for a single individual with two personal allowances. We applied relevant deductions and exemptions before calculating income tax withholding. To better compare withholding across counties we assumed a $50,000 annual income. We then indexed the paycheck amount for each county to reflect the counties with the lowest withholding burden.
We then created a purchasing power index for each county. This reflects the counties with the highest ratio of household income to cost of living. We also created an unemployment rate index that shows the counties with the lowest unemployment. For income growth, we calculated the annual growth in median income over five years for each county and indexed the results.
Finally, we calculated the weighted average of the indices to yield an overall paycheck friendliness score. We used a one half weighting for semi-monthly paycheck and a one-sixth weighting for purchasing power, unemployment rate and income growth. We indexed the final number so higher values reflect the most paycheck friendly places.
Sources: SmartAsset, government websites, US Census Bureau 2016 5-Year American Community Survey, MIT Living Wage Study, Bureau of Labor Statistics
