What Changes in Your Paycheck in New Jersey
Your paycheck in New Jersey shows a New Jersey state income tax line item that grows progressively with income, starting at 1.4% for the first $1. However, because the brackets are compressed at the bottom, most middle and high earners quickly reach the 6.37%+ rates on most of their income. For a $1 salary, you might see ~ $1-$1 annually (~ $1-$1 per biweekly paycheck) for state tax, reflecting that most income is taxed at 6.37%. New Jersey paychecks only show state and federal tax deductions—no local income tax line items. The progressive brackets mean your state tax increases as you move through the low brackets, but most taxpayers reach the 6.37%-10.75% rates quickly due to the compressed bracket structure.
Example State Tax in New Jersey
What you'll pay in New Jersey state income tax at different salary levels (single filer, no deductions):
| Gross Salary | State Tax (Year) | Effective Rate |
|---|---|---|
| $50,000 | $1,270 | 2.5% |
| $75,000 | $2,651 | 3.5% |
| $100,000 | $4,244 | 4.2% |
| $150,000 | $7,429 | 5.0% |
Use the calculator above to see your exact take-home pay with your filing status and deductions.
Is New Jersey Better for You?
New Jersey works well for:
New Jersey works best for lower-income earners (under ~ $1 for singles, $1 for couples) who benefit from the progressive brackets with lower starting rates (1.4%-5.5%). At these income levels, effective state tax rates are 2%-4%, which can be competitive with or lower than flat-tax states Retirees 62+ also benefit from exemptions on Social Security and most retirement income, plus the low starting brackets help retirees with lower fixed incomes.
New Jersey may not be ideal if:
New Jersey is challenging for middle-high and high earners (~ $1+ for singles, $1+ for couples) because the compressed brackets mean most of their income is taxed at the 6.37%-10.75% rates. Someone earning $1 in New Jersey pays an effective rate around 6%-6.5% (~ $1-$1 annually), while the same earner in a flat-tax state like Pennsylvania would pay $1 (3.07% flat, though PA may have local EIT), and in Illinois would pay $1 (4.95% flat). High earners with geographic flexibility save $1-$1+ annually by moving to flat-tax or zero-tax states.
Key Facts That Affect Your Take-Home Pay
- New Jersey uses a progressive income tax system with seven brackets, starting at 1.4% for the first $1 of income and escalating to a top rate of 10.75% for income over $1 million (single) or $1+ (married), making New Jersey one of the states with the highest top marginal rates in the nation.
- New Jersey's progressive brackets are compressed at the bottom, meaning the first few brackets cover relatively low dollar amounts ($1-$1 for singles), so most middle and high earners quickly reach the higher 6.37%-10.75% rates. For a $1 earner, most income is taxed at 6.37%, making the effective rate very close to the top bracket rate for many taxpayers.
- New Jersey does not impose income taxes at the local level, ensuring the same tax structure applies throughout the state. All New Jersey residents have the same income tax structure—only the state progressive brackets apply.
- New Jersey does not impose state income tax on Social Security benefits or retirement distributions (pensions, 401(k) withdrawals, IRA distributions) for residents 62 and older, making the state attractive for retirees despite the progressive income tax structure. However, property taxes in New Jersey are among the highest in the nation, offsetting some retirement benefits.
Common Mistakes People Make
Misconception: 'Progressive tax means I'll pay the top 10.75% on all my income in New Jersey.' Reality: New Jersey's progressive system starts at just 1.4% for the first $1 of income. Someone earning $1 pays an effective rate around 5.5%-6%, not 10.75%. The 10.75% rate only applies to income above $1 million (single) or $1+ (married). The progressive brackets mean you pay different rates on different portions of income.
Misconception: 'No local taxes means New Jersey is cheaper than other states.' While New Jersey avoids local income tax complications, the state's high property taxes (among the highest in the nation, averaging $1-$1+ annually for typical homes) and the progressive income tax with relatively high rates can create a significant tax burden. A high earner in New Jersey pays 6.37%-10.75% income tax, while a high earner in a flat-tax state like Pennsylvania pays 3.07% state (though PA may have local EIT).
Misconception: 'The brackets mean my tax is spread out across different rates.' Reality: New Jersey's brackets are compressed at the bottom, meaning the first few brackets cover relatively low dollar amounts ($1-$1). For most taxpayers earning above $1-$1, virtually all income above the first bracket is taxed at 6.37% or higher. A $1 earner pays 6.37% on ~ $1-$1 of their income, making their effective rate very close to the 6.37% bracket rate.
One Thing to Know
New Jersey's property taxes are among the highest in the nation, but they're not on your paycheck—they come through mortgage escrow or direct bills. Many people focus on the income tax rates and are shocked when they see $1-$1+ annual property tax bills, which can make New Jersey one of the highest total tax burden states despite moderate income tax rates.
Important Notes
These calculations are estimates based on current tax law. Your actual take-home pay varies based on:
- Pre-tax deductions (401(k), health insurance, HSA, etc.)
- Your W-4 withholding elections
- Additional income or deductions at tax time
- Individual circumstances and tax situations
Tax rates are subject to change. Federal and state tax laws may be updated annually. This is not tax advice. For personalized help, consult a tax professional familiar with New Jersey tax laws.