New Jersey Taxes for Tax Year 2025 (Filed 2026): Rates, Sales Tax, Property, Inheritance
Understanding NJ Taxes is vital for both residents and businesses. New Jersey State Taxes cover income, sales, property and inheritance taxes, and more. This guide offers clear, up‑to‑date insight into the main taxes you’ll encounter, so you can navigate New Jersey State Taxes confidently and plan smartly.
New Jersey State Income Tax
New Jersey State Income Tax is a progressive gross income tax on residents, part‑year residents, non‑residents earning New Jersey income, and estates or trusts. Rates for 2025 individual filers range from 1.400% on income up to $20,000, rising to 10.750% on taxable income over $1,000,000.
NJ Taxes on retirees: New Jersey exempts Social Security and Railroad Retirement benefits; if you are age 62 or older (or disabled) and your total income is $150,000 or less, you may exclude some or all taxable pension, annuity, and IRA withdrawals. The maximum exclusion is $75,000 (single/HOH) or $100,000 (married/CU filing jointly) when total income is $100,000 or less.
See Income Tax Changes for Tax Year 2025 for the official NJ updates and the Tax Year 2025 filing deadline.
2025 Tax Brackets:
| Filing Status | Taxable Income | Tax Rate |
| Single or Married Filing Separately | $ 0 – 20 000 | 1.400 % |
| 20 001 – 35 000 | 1.750 % | |
| 35 001 – 40 000 | 3.500 % | |
| 40 001 – 75 000 | 5.525 % | |
| 75 001 – 500 000 | 6.370 % | |
| 500 001 – 1 000 000 | 8.970 % | |
| Over 1 000 000 | 10.750 % | |
| Married Filing Jointly; Head of Household; Qualifying Surviving Spouse | $ 0 – 20 000 | 1.400 % |
| 20 001 – 50 000 | 1.750 % | |
| 50 001 – 70 000 | 2.450 % | |
| 70 001 – 80 000 | 3.500 % | |
| 80 001 – 150 000 | 5.525 % | |
| 150 001 – 500 000 | 6.370 % | |
| 500 001 – 1 000 000 | 8.970 % | |
| Over 1 000 000 | 10.750 % |
NJ State Tax Examples:
Example 1: A single filer with $60,000 taxable income would pay:
First $20,000 X 1.4%: $280
Next $15,000 X 1.75%: $262.50
Next $5,000 X 3.5%: $175
Remaining $20,000 X 5.525%: $1,105
Total ≈ $1,822.50
This effective rate (about 3.0% on $60,000) shows how the structure impacts taxpayers with mid‑level incomes.
Example 2: Married Filing Jointly, $180,000 Taxable Income
| Income Bracket | Rate | Tax on That Portion |
| $0 – $20,000 | 1.40% | $280 |
| $20,001 – $50,000 | 1.75% | $525 (on $30,000) |
| $50,001 – $70,000 | 2.45% | $490 (on $20,000) |
| $70,001 – $80,000 | 3.50% | $350 (on $10,000) |
| $80,001 – $150,000 | 5.525% | $5,525 (on $100,000) |
| $150,001 – $180,000 | 6.37% | $1,911 (on $30,000) |
| Total Tax Liability | $9,081 |
Effective NJ Income Tax Rate = 9,081 ÷ 180,000 ≈ 5.04%
Example 3: Married Couple (Both 65)
| Income Source | Amount | NJ Tax Treatment |
| Pension / IRA distributions | $90,000 | Fully taxable—but up to $100k may be excluded |
| Interest & dividends | $30,000 | Fully taxable | | |
| Social Security benefits | $35,000 | Fully exempt under NJ law |
Total federal AGI = $155,000
New Jersey gross income (Line 27) = $90,000 + $30,000 = $120,000 (excludes Social Security)
Because they are both over 62 and their joint gross income is $120,000 (≤ $150k), they qualify to exclude the lesser of their pension income or the $100,000 maximum available to joint filers. Since $90k pension < $100k max, they can exclude $90k completely.
Therefore, the taxable income is $120,000 − $90,000 = $30,000
Filing Your NJ State Income Tax
To file New Jersey State Income Tax, residents and part-year residents generally use Form NJ-1040, and nonresidents use Form NJ-1040NR. The filing deadline is generally April 15. You can file manually by mail or use the free NJ Online Filing Service for calendar‑year returns. NJ automatic extensions may apply to businesses or self‑employed taxpayers.
Download NJ‑1040 Resident Income Tax Return & Instructions
NJ State Taxes on Investment, Capital Gains & Rental Income
Most investment income counts as gross income and is taxed at your marginal rate, including:
- Interest and dividends (except those from U.S. or New Jersey government bonds, municipal bonds, or U.S. savings bonds, which are exempt).
- Capital gains: Treated as ordinary income for New Jersey (short‑ or long‑term). However, sale of your primary residence qualifies for the federal $250,000/$500,000 exclusion, which New Jersey honors. Any taxable gain above that is taxed at your bracket rate.
- Rental income: Net rental income is taxable as ordinary income; eligible deductions include mortgage interest, property taxes, repairs, depreciation, etc.
For example, you have $10,000 in long‑term capital gains and your marginal rate is 5.525%, your New Jersey tax on that gain would be around $552.50.
New Jersey Sales and Use Tax
New Jersey Sales Tax is 6.625% on most tangible personal property, specified digital products, and certain services, unless exempt under state law.
There’s a 50% reduction to 3.3125% in designated Urban Enterprise Zones to spur local business growth.
Example: Buying a $1,000 laptop in New Jersey would incur about $66.25 in sales tax (3.3125% if in a U.E.Z.).
Common exemptions include most clothing, groceries, prescription medicines and unprepared foods.
Sales Tax filings are typically due by the 20th day of the month after the reporting period, with penalties if late.
New Jersey Property Tax
New Jersey Property Tax is levied locally by municipalities, counties and school districts. New Jersey has one of the highest effective property tax burdens in the U.S; recent estimates commonly put the average effective rate around the high 1% range. This is one of the highest effective rates in the U.S.
Example: On a $300,000 home, average annual property tax would be about $5,310.
Property Tax Relief Options:
- The ANCHOR Program (Affordable New Jersey Communities for Homeowners and Renters) provides rebates to those under income limits based on age and residency.
- On your NJ income tax return, homeowners can claim a property tax deduction (up to $15,000); renters treat 18% of rent paid as property taxes paid for purposes of the NJ property tax benefit calculation.
- New Jersey’s Senior Freeze (Property Tax Reimbursement) can reimburse eligible seniors and disabled residents for property tax increases after their base year. Applications are now handled through the combined property tax relief application (PAS-1), and eligibility depends on residency, age/disability status, and income limits.
Inheritance Tax and Estate Tax
Use New Jersey’s official Inheritance Tax Rates table for the class exemptions and brackets.
New Jersey no longer imposes a state estate tax for residents or non‑residents dying on or after January 1, 2018.
However, Inheritance Tax still applies to certain beneficiaries based on:
- Class A beneficiaries (spouse, civil union partner, children, grandchildren, parents) – exempt from inheritance tax.
- Class C beneficiaries (for example siblings and sons or daughters-in-law) have a $25,000 exemption, then the rates are 11%, 13%, 14%, and 16% as the amount inherited increases, with 16% applying over $1,700,000.
- Class D beneficiaries are taxed 15% on the first $700,000, and 16% over $700,000.
New Jersey imposes a lien on the decedent’s property for 15 years unless a tax waiver is issued (forms and processing through the Division of Taxation). Inheritance Tax is due within eight months of the date of death; returns and payments are generally handled on that timeline when tax applies.
NJ State Taxes on Businesses
Corporation Business Tax (CBT)
Businesses, including C-Corps and S-Corps, pay New Jersey Corporation Business Tax on entire net income allocable to the state.
- 6.5% for entire net income $50,000 or less
- 7.5% for entire net income over $50,000 up to $100,000
- 9% for entire net income over $100,000
From 2020 through 2023, NJ enacted a temporary surtax that brought the top rate to 11.5% for income over $1 million; that surcharge has since expired and the rate returned to 9% by 2024–2025.
Minimum tax applies based on receipts or payroll, scaling up to $2,000 for large corporations.
Corporate Transit Fee: Certain corporations with allocated net income above a threshold may owe an additional temporary surcharge (separate from the regular CBT rate), so large C-corps should confirm whether the Corporate Transit Fee applies for the tax year.
Pass‑Through Entity / Alternative Income Tax (PTE / BAIT)
New Jersey’s Pass-Through Business Alternative Income Tax (PTE/BAIT) lets eligible pass-through entities elect to pay tax at the entity level. The calculation is tiered, and income over $1 million is taxed at 10.9% under the updated rules.
Practical Tips for Managing NJ Taxes
- Max out deductions and credits, including ANCHOR rebates, income tax property tax deduction/credit and exclusions for retirement income.
- Stay organized: Maintain records of W‑2s, 1099s, investment statements, property tax bills, rent or mortgage details, healthcare, charitable giving etc.
- Plan for estimated taxes if you receive significant non‑wage income or operate a business. Underpaying can lead to penalties.
- Track changes: Recent state budgets for fiscal year 2025 include expanded Stay NJ rebates and a new “mansion tax” on high-end real estate, which may impact high‑net‑worth New Jersey residents .
- Consult a tax professional: Because New Jersey Taxes are especially complex, tailored guidance can save you thousands and ensure compliance.
NJ Pension/Retirement Income Exclusion Worksheet (Worksheet D)
Conclusion
NJ State Taxes differ significantly from those of many other states, especially due to the high property tax burden and layers of taxation that include inheritance tax. By staying informed about current rates, available credits, and filing rules, you can manage the state’s tax structure effectively and reduce surprise liability. For complex situations like estate planning or real estate investments, seeking expert advice is strongly recommended.
