Income Taxes in New Jersey
New Jersey's income tax is real and genuinely graduated -- seven brackets running from a modest 1.4% up to a well-known 10.75% top rate above $1 million, New Jersey's so-called 'millionaire's tax,' made permanent by law in 2020 -- a structurally different system from the flat-tax states built elsewhere in this project.
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Learn moreA real, seven-bracket graduated structure
New Jersey's full bracket structure: 1.4% up to $20,000; 1.75% from $20,001-$35,000; 3.5% from $35,001-$40,000; 5.525% from $40,001-$75,000; 6.37% from $75,001-$500,000; 8.97% from $500,001-$1,000,000; and 10.75% above $1,000,000. Most New Jersey households pay a genuinely modest effective rate given this graduated structure -- it is only income above $1 million that reaches the headline 10.75% figure.
Newark's real, additional 1.00% city payroll tax
Newark, New Jersey's largest city, levies a real, additional 1.00% city payroll/earned-income tax on top of New Jersey's state income tax and federal income tax -- a genuine local-tax complexity distinct from most Northeast states, though structurally lighter and simpler than Pennsylvania's local Earned Income Tax system or Ohio's RITA/CCA municipal-tax network. Budget this separately if you're working in Newark specifically.
Real, additional statewide payroll withholdings beyond the income-tax brackets
New Jersey also levies separate state disability insurance (SDI) and family leave insurance (FLI) payroll withholdings -- a genuine additional line item beyond the income-tax brackets above, and a real, distinct feature of New Jersey's tax structure worth understanding as part of your total withholding, not folded into the bracket figures.
How this compares to New Jersey's other taxes
New Jersey's income tax is genuinely progressive, layered on top of a real, nation's-highest-tied property tax burden and a comparatively simple, single-rate 6.625% sales tax with no local add-on. This record treats New Jersey's real, substantial per-capita income strength -- driven by the state's NYC/Philadelphia commuter-belt wage base -- as a genuine relocation positive weighed directly against these tax realities. See the property-taxes and sales-tax topics.
Key takeaways
- New Jersey's income tax is genuinely graduated across seven brackets, from 1.4% up to a well-known 10.75% top rate above $1 million -- the 'millionaire's tax,' permanent since 2020.
- Most households pay a meaningfully lower effective rate than the 10.75% headline figure, given the graduated structure.
- Newark specifically layers a real, additional 1.00% city payroll/earned-income tax on top of state and federal layers.
- New Jersey also levies separate state disability insurance (SDI) and family leave insurance (FLI) payroll withholdings beyond the income-tax brackets.
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