New Jersey Tax Law

Paying taxes is a normal part of living in New Jersey. Taxes help to fund the state and special programs that improve the quality of life for state residence while supporting critical services such as law enforcement and disaster relief.

Whether you live in Newark, Jersey City or Paterson, you’ll need to account for the various state and federal taxes in your budget, including everyday sales and gasoline taxes. It can be easy to get lost in all of the taxes you’ll owe, so use the information in LawInfo’s New Jersey tax law articles to become familiar with them and to avoid penalties.

New Jersey Personal Income Taxes

New Jersey charges a progressive income tax rate that scales upward with higher income ranges. The higher your gross income is, the higher your rate will be and you must pay an additional marginal tax. The New Jersey Department of the Treasury provides two worksheets that you can use to determine your income tax bill: one for individuals or married couples filing jointly with an income of less than $100,000 and one for an income of more than $100,000.

New Jersey Property Tax Relief Programs

If your property tax burden in New Jersey is unmanageable, you may be able to qualify under one of New Jersey’s property tax relief programs. These programs can levy deductions or credits against your property tax or personal income taxes. The following are two of the general relief programs available to many New Jersey residents.

The Homestead Benefit Program is available to New Jersey residents who owned, occupied and paid property taxes on a primary residence in the state as of October 1, 2014. Your taxable income must be less than $75,000 if you are under 65 years of age or less than $150,000 if you are over 65 or blind/disabled. (The income limits are for taxpayers of any filing status.) You can receive a tax credit of up to $1,000 if you qualify.

The Property Tax Deduction/Credit for Homeowners and Tenants is available to taxpayers who occupied and paid property taxes on a primary residence in the state during the tax year. Your taxable income must be $20,000 or more if you are under 65 years of age or less than $20,000 if you are over 65 or blind/disabled. (The income limits are $10,000 for single or married taxpayers filing separately.)

The tax deduction can reduce your taxable income by up to $10,000. The tax credit can reduce your property tax rate with a refundable credit of $50 at minimum. You can only choose one of these benefits and you can receive it even if you didn’t qualify for the Homestead Benefit.

New Jersey Sales and Use Taxes

When you buy merchandise or pay for services in New Jersey, part of the total cost towards goods and services is the state’s sales or use tax. A use tax is charged instead of a sales tax for goods and services used in New Jersey but purchased from out-of-state vendors or sellers who don’t collect New Jersey’s sales tax. New Jersey’s sales and use rate tax is 6.875 percent as of January 1, 2017 and will decrease to 6.625 percent on January 1, 2018.