New Jersey state tax: Overview
New Jersey state sales tax isn’t so high when compared to sales taxes in other states. After all, several products in the state are exempt from tax and New Jersey’s sales tax rate is reduced in some areas.
However, New Jersey’s property taxes are high compared to other states, and income tax rates in New Jersey can climb quite high, depending on how much you earn.
[Data for this state tax guide was gathered from a number of sources including the Census Bureau, the state’s government website, the Sales Tax Handbook, and the Tax Foundation. Property taxes are cited as a rate percentage rather than the assessed value.]
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New Jersey income taxes
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New Jersey Income Tax Range: Single filers
| Up to $20,000 | 1.4% |
| $20,001 to $35,000 | 1.75% |
| $35,001 to $40,000 | 3.5% |
| $40,001 to $75,000 | 5.525% |
| $75,001 to $500,000 | 6.37% |
| $500,001 to $1 million | 8.97% |
| More than $1 million | 10.75% |
New Jersey Income Tax Range: Joint filers
| Up to $20,000 | 1.4% |
| $20,001 to $50,000 | 1.75% |
| $50,001 to $70,000 | 2.45% |
| $70,001 to $80,000 | 3.5% |
| $80,001 to $150,000 | 5.525% |
| $151,000 to $500,000 | 6.37% |
| $500,001 to $1 million | 8.97% |
| More than $1 million | 10.75% |
New Jersey tax on retirement income: New Jersey doesn’t tax Social Security retirement benefits, Military pensions, or Railroad Retirement benefits.
Taxpayers 62 and older (or those who have a disability) may exclude all or part of their retirement income from state taxation. For the 2023 tax year to qualify for the exclusion, taxpayers cannot have an income above $150,000.
New Jersey sales tax
New Jersey imposes a 6.625% state sales tax. Localities can add an additional 3.31%.
However, the average local and combined sales tax rate is only 6.601%, according to the Tax Foundation. That’s because the sales tax rate is reduced to 3.5% in New Jersey’s Urban Enterprise Zones.
- Groceries are tax-exempt.
- Prescription drugs are tax-exempt.
- Diapers are tax-exempt.
- Women’s menstrual products are tax-exempt.
How much are property taxes in New Jersey?
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In New Jersey, the average effective property tax rate is 2.47%, which is the highest in the nation.
New Jersey Property Tax Breaks for Retirees
Eligible New Jersey homeowners and renters may receive an Affordable New Jersey Communities for Homeowners and Renters (ANCHOR) benefit. Homeowners and renters must meet income limits to qualify. 2023 ANCHOR applications are based on the 2020 tax year.
- Homeowners must have had a 2020 New Jersey gross income of $250,000 or less.
- Renters must not have had a gross income above $150,000 for the 2020 tax year.
Additional requirements apply, including 2020 residency status and whether property taxes were paid for the 2020 tax year.
New Jersey gas taxes (motor fuel)
Gasoline: $0.423 per gallon (effective October 2023)
Diesel: $0.493 per gallon (effective October 2023)
New Jersey taxes on alcohol and tobacco
| Cigarettes | $2.70 per pack |
| Other tobacco products | 30% of wholesale price |
| Beer | $0.12 per gallon |
| Wine | $0.88 per gallon |
| Liquor | $5.50 per gallon |
New Jersey estate and inheritance taxes
There is no longer an estate tax in New Jersey, but that doesn’t mean residents are off the hook for paying death taxes.
The state has an inheritance tax of between 11% and 16%. However, the heirs below won’t need to pay a thing.
- Spouses
- Children
- Grandchildren and great-grandchildren
- Parents and grandparents
- Civil union partners