Taxation in New Jersey
The U.S. state of New Jersey levies a state personal income tax and state corporate income tax and a state sales tax. Property taxes are also levied by [List of List of municipalities in New Jersey|municipalities in New Jersey|municipalities], counties, and school districts.
History
From the founding of the New Jersey colony to the 1870s, the main form of taxation was property taxes.Personal income tax
The tax table below will show in detail the New Jersey state income tax rates by income tax bracket. There are 6 income tax brackets for New Jersey.Tax brackets for individuals are provided below:
- For earnings between $1 and $20,000, the tax rate on every dollar of income earned is 1.4%.
- For earnings between $20,001 and $35,000, the tax rate on every dollar of income earned is 1.75%.
- For earnings between $35,001 and $40,000, the tax rate on every dollar of income earned is 3.5%.
- For earnings between $40,001 and $75,000, the tax rate on every dollar of income earned is 5.525%.
- For earnings between $75,001 and $500,000, the tax rate on every dollar of income earned is 6.37%.
- For earnings of $500,001 and over, the tax rate on every dollar of income earned is 8.97%.
+ + + = $280 + $262.50 + $175 + $552.50 = $1,270, for an overall rate of 2.54%.
Beginning in 2019, the top marginal rate will be raised to 10.75% for incomes over $5 million, making it the second highest top marginal tax rate in the nation.
Sales tax
New Jersey has a 6.625% state sales tax, which was cut in steps from the previous rate of 7%. All revenues are deposited in the State Treasury for general state use; nothing goes to municipalities.In urban enterprise zones, the state sales tax is cut in half to encourage economic development, resulting in an effective tax rate of 3.3125%. A full list of urban enterprise zones is available on the State of New Jersey website.
New Jersey does not charge sales tax on most unprepared foods, household paper products, medicine, and clothing. As of July 1, 2022 New Jersey Does not charge sales tax on medical cannabis. New Jersey does not charge sales tax on gasoline, but gasoline is subject to a $0.418/gallon excise tax.
Cigarettes are subject to a $2.70 per pack excise tax in addition to sales tax.