New Jersey Tax Rates

This post provides an overview of the primary taxes levied at the state level in New Jersey. The state is characterized by a high overall tax burden, particularly due to high property taxes and one of the nation’s highest top marginal income tax rates. For individuals or businesses seeking comprehensive support with tax filings, compliance, or strategic planning, indinero offers expert services. We encourage all who utilize this summary to explore the tailored tax support available through indinero.

Individual Income Tax

New Jersey utilizes a progressive state individual income tax system with eight tax brackets.

  • State Rates: Rates range from a low of 1.40% to a top marginal rate of 10.75% (for the 2025 tax year). The 10.75% rate is one of the highest in the U.S. and applies to taxable income exceeding $1 million.
  • Retirement Income: Social Security benefits are not taxable in New Jersey. The state also offers a substantial exclusion for pension and retirement income, though this is subject to income thresholds and adjustments for inflation.
  • Local Income Tax: New Jersey does not impose a local or county income tax on workers. While Newark has a 1% payroll tax, it is levied on the employer, not the employee.

Sales and Use Tax

New Jersey relies on a uniform state sales tax rate that is below the national average for combined rates.

  • State Rate: The general state sales tax rate is a uniform 6.625% on the retail sale of most tangible personal property and certain specified digital products and services.
  • No Local Sales Tax: New Jersey generally does not permit local or county sales taxes, maintaining a single statewide rate.
  • Reduced Rate (Urban Enterprise Zones): A reduced sales tax rate of 3.3125% (half the state rate) applies to certain sales made by certified businesses within designated Urban Enterprise Zones (UEZ) in cities like Newark and Camden.
  • Exemptions: Key exemptions include groceries (unprepared food for home consumption), prescription drugs, and most clothing and footwear.
  • Use Tax: A state use tax of 6.625% applies to taxable items purchased outside of New Jersey but used, stored, or consumed in the state if state sales tax was not collected.

Property Tax (Ad Valorem Tax)

Property taxes in New Jersey are among the highest in the nation by every metric and are collected exclusively at the local level by municipalities and school districts.

  • Effective Rate: The average effective property tax rate on owner-occupied housing is approximately 2.23% (for 2025), ranking New Jersey as one of the highest-taxed states for property.
  • Assessment: All real property must be assessed at its full and fair market value (100% of market value).
  • Tax Calculation: The tax is calculated by applying the local mill rate (set by local budgets to fund schools, municipal services, and county services) to the assessed value.
  • Property Tax Relief: The state offers several relief programs to offset this burden, including the Homestead Benefit program (a property tax credit) and the Senior Freeze (Property Tax Reimbursement) program, which reimburses eligible seniors for increases in property taxes.

Corporate Business Tax (CBT)

New Jersey imposes a corporate income tax that is officially called the Corporate Business Tax (CBT) and is notable for having a high top rate.

  • Tax Rates: The CBT uses a tiered, graduated structure:
    • 6.5% on net income of $50,000 or less.
    • 7.5% on net income between $50,001 and $100,000.
    • 9.0% on net income over $100,000.
  • Surcharge (Repealed): The state’s 2.5% corporate surcharge expired at the end of 2023, bringing the top marginal rate down from 11.5% to 9.0% for 2024 and beyond.
  • Minimum Tax: A minimum tax ranging from $500 to $2,000 is imposed based on New Jersey gross receipts.
  • Apportionment: For multi-state corporations, New Jersey uses a single sales factor apportionment method to determine the amount of income taxable in the state.

Unique and Miscellaneous Taxes

  • Inheritance Tax: New Jersey is one of the few states that imposes an inheritance tax on assets transferred to certain beneficiaries upon death. The rate varies based on the relationship to the decedent, with immediate family members (spouses, children, parents, grandchildren) being fully exempt.
  • Estate Tax: New Jersey no longer imposes a state-level estate tax (it was fully repealed in 2018).
  • Motor Fuel Tax: A per-gallon tax is levied on motor fuels, set at approximately 44.95 cents per gallon for gasoline.

R&D Offer Quiz

Step 1 of 3

Answer to find out if you're eligible for R&D tax credits.

Do the activities performed relate to a new or improved business component’s function, performance, reliability, quality, or composition?(Required)
For Example: A mid-sized packaging company develops a slightly modified cardboard box design to improve its stacking strength (reliability) for warehouse storage, involving minor adjustments to the corrugation pattern to reduce collapse under standard weight loads.
Is your company trying to discover information to eliminate uncertainty concerning the capability or method for developing or improving a business component?(Required)
For Example: A furniture manufacturer investigates whether a cheaper wood adhesive can hold joints as effectively as the current one during assembly, testing bond strength to resolve doubts about its capability in standard production lines.
Do the activities performed constitute a process of experimentation?(Required)
For Example: An auto parts supplier runs a series of bench tests on different lubricant formulations to find one that reduces friction in engine bearings more effectively, systematically comparing wear rates over simulated operating cycles.