Taxes in New Jersey: State Tax Guide 2026
Data Notice: Figures, rates, and statistics cited in this article are based on the most recent available data at time of writing and may reflect projections or prior-year figures. Always verify current numbers with official sources before making financial, medical, or educational decisions.
Taxes in New Jersey: State Tax Guide 2026
Tax information is for educational purposes only and does not constitute tax advice. Consult a licensed tax professional for your specific situation.
New Jersey is known for having the highest property taxes in the nation. Combined with a progressive income tax that reaches 10.75% and a statewide sales tax, New Jersey consistently ranks among the highest overall tax burden states. Understanding the details helps residents make informed financial decisions.
New Jersey Income Tax Rates (2026)
New Jersey uses a progressive income tax system with seven brackets. Rates for single filers:
| Tax Rate | Taxable Income Range |
|---|---|
| 1.40% | $0 – ~$20,000 |
| 1.75% | ~$20,001 – ~$35,000 |
| 3.50% | ~$35,001 – ~$40,000 |
| 5.525% | ~$40,001 – ~$75,000 |
| 6.37% | ~$75,001 – ~$500,000 |
| 8.97% | ~$500,001 – ~$1,000,000 |
| 10.75% | Over ~$1,000,000 |
Married filing jointly brackets have slightly different thresholds.
New Jersey Deductions and Exemptions
| Item | Amount |
|---|---|
| Personal exemption | ~$1,000 per person |
| Dependent exemption | ~$1,500 per dependent |
| Senior exemption (65+) | Additional ~$1,000 |
| Blind/disabled exemption | Additional ~$1,000 |
New Jersey does not offer a standard deduction. It allows a limited set of itemized deductions including medical expenses (exceeding 2% of income), property taxes, and certain other items.
Notable New Jersey Tax Credits
- Earned Income Tax Credit: 40% of the federal EITC — one of the most generous state matching rates
- Child Tax Credit: Up to ~$1,000 per child for qualifying families
- Property Tax Deduction/Credit: Homeowners can deduct up to ~$15,000 in property taxes or claim a ~$50 credit
- NJ Child and Dependent Care Credit: Based on federal credit
- Retirement Income Exclusion: Up to ~$100,000 for qualifying filers 62+ with income under ~$150,000
Sales Tax
| Component | Rate |
|---|---|
| State rate | 6.625% |
| Urban Enterprise Zones | 3.3125% (half rate) |
New Jersey does not allow local sales tax additions, so the rate is uniform statewide (except in designated Urban Enterprise Zones).
Exempt from sales tax: Most groceries, clothing, footwear, prescription medications, and OTC drugs. New Jersey’s clothing exemption is a significant benefit.
Property Tax
| Metric | Amount |
|---|---|
| Average effective rate | 2.23% |
| National average | 0.99% |
| Rank among states | #1 highest |
New Jersey has the highest average effective property tax rate in the nation.
Example: A home valued at $400,000 pays approximately $8,920 per year in property taxes. The national average for the same home would be approximately $3,960.
Property Tax Relief Programs
- Homestead Benefit: Annual credit applied to the property tax bill for qualifying homeowners (income limits apply)
- Senior Freeze (PTR): Reimburses the difference between the current and base year property tax for qualifying seniors 65+
- ANCHOR Program: Property tax rebate for homeowners (up to ~$1,500) and renters (up to ~$450)
- Veteran’s Deduction: ~$250 annual property tax deduction for qualifying veterans
Inheritance Tax
New Jersey imposes an inheritance tax (but no estate tax as of 2018):
| Heir | Tax Rate |
|---|---|
| Spouse, children, grandchildren, parents | 0% (Class A — exempt) |
| Siblings, children-in-law | 11%–16% (Class C) |
| All other heirs | 15%–16% (Class D) |
The first $25,000 inherited by Class C beneficiaries is exempt.
How New Jersey Compares to National Averages
| Tax Type | New Jersey | National Average |
|---|---|---|
| Top income tax rate | 10.75% | ~5.0% |
| Effective rate (~$75K single) | ~4.9% | ~3.5% |
| Sales tax | 6.625% | 6.6% |
| Property tax (effective) | 2.23% | 0.99% |
| Overall tax burden rank | Top 3 highest | — |
Who Benefits from Living in New Jersey
New Jersey may work well for:
- NYC commuters — Access to NYC jobs while potentially paying lower income tax than NYC residents (no city tax)
- Shoppers — No sales tax on clothing, groceries, or OTC medications
- Retirees with moderate income — The retirement income exclusion (up to $100,000) and Senior Freeze provide relief
- Lower-income families — The 40% state EITC match and child tax credit are among the most generous in the nation
- Renters — Avoid direct property tax burden and benefit from ANCHOR rebates
New Jersey may be costly for:
- Homeowners — The highest property taxes in the nation create a massive annual expense
- High earners — The 10.75% top rate on income over $1 million rivals the highest rates nationally
- Heirs (non-Class A) — Inheritance tax of 11%–16% on assets left to siblings and others
- Self-employed — Combined income tax and property tax create a significant total burden
New Jersey-Specific Considerations
- Social Security is fully exempt from New Jersey income tax
- Retirement income exclusion — Up to ~$100,000 for filers 62+ with income under ~$150,000
- No local income taxes — Unlike neighboring Pennsylvania and New York City
- Reciprocal agreement with Pennsylvania — PA residents working in NJ (and vice versa) are taxed only by their home state
- Corporation Business Tax: 6.5%–11.5% on corporate income (surcharge for large corporations)
- Transit Village tax incentives — Tax benefits available in designated transit-oriented development areas
Key Takeaways
- New Jersey has the highest property taxes in the nation, averaging 2.23% effective rate
- The progressive income tax reaches 10.75% on income over ~$1 million
- No sales tax on clothing, groceries, or medications partially offsets the high property and income taxes
- Retirement income up to ~$100,000 can be excluded for qualifying filers 62+
- Social Security is fully exempt from state income tax
- The 40% state EITC match is among the most generous in the country
Next Steps
- Compare New Jersey to other states at State Income Tax Comparison: All 50 States Ranked
- Calculate your federal taxes with the Tax Bracket Calculator 2026
- Planning for inheritance? See Estate and Inheritance Tax Guide 2026
- Explore deductions — Tax Deductions You’re Probably Missing (Itemized vs Standard)
- Find a New Jersey CPA — Find a CPA Near You