New Jersey State Taxes
New Jersey State Tax ? Personal Income Tax
The New Jersey Division of Taxation levies a tax on gross income earned/received by full-year residents, part-year residents, nonresidents, estates, and trusts. In most cases, NJ gross income tax is withheld from paychecks by employers. In other cases, quarterly estimated tax payments must be made.
A New Jersey income tax return must be filed an individual if any of the following apply:
- He/she had New Jersey income tax withheld from wages
- He/she paid New Jersey estimated taxes and is owed a refund
- He/she intends to receive New Jersey tax credit (e.g., earned income tax credit)
- He/she is due a refund or credit, even if his/her income is below the minimum income threshold
Filing status and gross income determine whether or not an individual has to file a New Jersey state tax return. Age is not a determining factor. The income thresholds (for all types of residents) for tax years 2001 and thereafter are as follows:
- Single filers, married/CU couples filing separately, estates, and trusts with income over $10,000 (for the entire year) must file a NJ return and pay tax
- Heads of household, married/CU couples filing jointly, and surviving spouses with income over $20,000 (for the entire year) must file an NJ return and pay tax
‘Gross income’ refers to all the income you received in the form of money, goods, property, and services ? unless specifically exempted by law. Gross income consists of taxable income after exclusions are subtracted, but before personal exemptions are subtracted. It does not include taxable benefits.
The following tax rates apply to taxpayers who use the ‘single’ or ‘married/CU couple filing separately’ filing statuses:
- 1.4% on the first $20,000 of taxable income
- 1.75% on taxable income between $20,001 and $35,000
- 3.5% on taxable income between $35,001 and $40,000
- 5.525% on taxable income between $40,001 and $75,000
- 6.37% on taxable income between $75,001 and $400,000
- $23,353.75 plus 8% on taxable income between $400,001 and $500,000
- $31,353.75 plus 10.25% on taxable income between $500,001 and $1,000,000
- $82,603.75 plus 10.75% on taxable income of $1,000,001 or more
The following tax rates apply to taxpayers who use the ‘head of household,’ ‘married/CU couple filing jointly,’ or ‘qualifying widow/widower’ filing statuses:
- 1.4% on the first $20,000 of taxable income
- 1.75% on taxable income between $20,001 and $50,000
- 2.45% on taxable income between $50,001 and $70,000
- 3.5% on taxable income between $70,001 and $80,000
- 5.525% on taxable income between $80,001 and $150,000
- 6.37% on taxable income between $150,001 and $400,000
- $21,437.50 plus 8% on taxable income between $400,001 and $500,000
- $29,437.50 plus 10.25% on taxable income between $500,001 and $1,000,000
- $80, 687.50 plus 10.75% on taxable income of $1,000,001 or more
New Jersey provides numerous tax breaks (exclusions, exemptions, deductions, and credits) to help individuals reduce their tax liability. Find out which tax breaks you are eligible for to decrease the amount of taxes you will owe.
New Jersey tax returns are due by April 15th each year. Full-year residents and part-year residents should use Form NJ-1040 (State of New Jersey ‘ Resident Income Tax Return) to file their income taxes. Nonresidents should use Form NJ-1040NR (State of New Jersey ‘ Nonresident Income Tax Return) to file their taxes, and also the regular resident return if necessary.
If you cannot file your New Jersey return on time, you may apply for an extension online or by filing Form NJ-630 (Application for Extension of Time to File New Jersey Gross Income Tax Return) by the original due date. This is only an extension for time to file, not for payment of tax ? any tax that you owe must still be paid by April 15th.
New Jersey State Tax ? Corporation Business Tax
New Jersey imposes a franchise tax on all domestic corporations (for the privilege of existing as a corporation under NJ law) and foreign corporations (for the privilege of conducting activities in the State) having taxable status in New Jersey, unless specifically exempt. Types of corporations subject to tax also include joint-stock companies, business trusts, limited partnership associations, financial business corporations, and banking corporations.
The corporation business tax rate is 9% on entire net income (or the portion of entire net income allocated to New Jersey, for a foreign corporation). Corporations must pay this net income tax or the ‘alternative minimum assessment,’ whichever is greater. The alternative minimum assessment is based on apportioned gross receipts, at the following rates:
- $500 for corporations with New Jersey gross receipts less than $100,000
- $750 for corporations with NJ gross receipts between $100,000 and $249,999
- $1,000 for corporations with NJ gross receipts between $250,000 and $499,999
- $1,500 for corporations with NJ gross receipts between $500,000 and $999,999
- $2,000 for corporations with NJ gross receipts of $1,000,000 or more
For years beginning on or after January 1, 2002, corporations with entire net income of $50,000 or less are taxed at a reduced 6.5% rate, and corporations with entire net income between $50,001 and $100,000 are taxed at a rate of 7.5%.
Every corporation with taxable status in New Jersey must file Form CBT-100 (Corporation Business Tax Return) each fiscal year. All corporations (both domestic and foreign) must also electronically submit an annual report and filing fee.
New Jersey State Tax ? Sales & Use Tax
New Jersey’s sales and use tax applies to the receipts from retail sale, rental, or use of tangible personal property and digital property, as well as certain services. Tangible personal property was recently adjusted to include electronically delivered prewritten computer software. The sales tax rate in New Jersey is currently 7%.
The ‘use tax’ is a component of the sales tax. It is imposed on the purchases of taxable goods and services for which New Jersey sales tax is not collected (or is collected at a rate less than NJ’s rate). The use tax is due when these goods enter the State of New Jersey, and it is the responsibility of the purchaser to pay. If sales tax was already paid to another state, the use tax is only due if the tax was paid at a lower rate than NJ’s rate.
The use tax typically applies to Internet, mail-order, and catalog purchases. Individuals must report and pay any use tax due with Form ST-18 (Use Tax) or on Form NJ-1040 (their NJ Resident Income Tax Return) within 20 days after the goods come into New Jersey.
Persons required to collect New Jersey sales tax must file Form NJ-REG (Business Registration Application) at least 15 days before opening business. They will then be issued a ‘Certificate of Authority’ by the Division of Taxation, which should be displayed prominently at the place of business. Form NJ-REG may also be filed online at the New Jersey Business Gateway Services Website.
If sales tax is collected on a nontaxable item, an individual (the purchaser/consumer) may request a refund from the seller, or from the Division of Taxation using Form A-3730 (Claim for Refund) within 4 years of the transaction.
New Jersey State Tax ? Property Tax
Property tax in New Jersey is an ‘ad valorem’ tax, which means that property is taxed according to its true market value. All real property is subject to taxation (unless specifically exempt by law). The term real property generally refers to land, and anything built, growing, or installed on that land.
New Jersey’s ‘home rule’ concept of government allows counties/municipalities to administer and collect property taxes. Rates are determined on the local level, based on local budget expenses. Payments are due every year in 4 installments ? February 1, May 1, August 1, and November 1.
An individual’s property tax is calculated by multiplying the tax rate by the assessed value of their property. All real property is assessed according to the same standard of value by uniform rules (except for qualified farmland for agricultural or horticultural use). Real property is assessed at 100% of its fair market value. Municipal tax assessors value property with a number of factors in mind, including the economy, government, location, and physical characteristics. Taxpayers who disagree with their property’s assessment may make an appeal to the County Tax Board.
There are several property tax relief programs, administered by local municipalities, including the following:
- An annual property tax deduction of up to $250 for senior citizens and disabled persons who meet certain income and residency requirements
- An annual deduction of up to $250 for qualified veterans and their surviving spouses/CU partners/domestic partners
- A full property tax exemption on a principal residence for qualified disabled veterans and their surviving spouses/CU partners/domestic partners
New Jersey State Tax Forms
Form NJ-1040 (State of New Jersey Income Tax ‘ Resident Return)
Form NJ-1040 Schedules A, B, and C (Credit for Income or Wages Paid to Another Jurisdiction, Net Gains or Income From Disposition of Property, and Net Gain or Income From Rents, Royalties, Patents and Copyrights)
Form NJ-1040 Schedules 1 and 1-A (Property Tax Deduction/Credit)
Form NJ-1040-V (NJ Gross Income Tax Payment Voucher)
Form NJ-1040-ES (Declaration of Estimated Tax Voucher)
Form NJ-1040NR (State of New Jersey Income Tax ‘ Nonresident Return)
Form NJ-1040NR-V (NJ Gross Income Tax Nonresident Payment Voucher)
Form NJ-630 (Application for Extension of Time to File New Jersey Gross Income Tax Return)
Form NJ-1040X (Amended Income Tax Resident Return)
New Jersey State Tax Resources
New Jersey Division of Taxation: www.state.nj.us/treasury/taxation
More information about New Jersey’s gross income tax can be found in the “Instruction Booklet” for New Jersey income tax returns: www.state.nj.us/treasury/taxation/pdf/091040i
NJ WebFile ? free internet filing for personal income tax returns: www.njwebfile.com
Check the status of your NJ state tax refund online: www1.state.nj.us/TYTR_RefundSearch
‘Property Tax in New Jersey’ (brochure): state.nj.us/treasury/taxation/lpt/ptbrochures.shtml
County Boards of Taxation (names and addresses by county): www.state.nj.us/treasury/taxation/lpt/cboards
Property Tax Assessors (names and addresses by county): www.state.nj.us/treasury/taxation/lpt/aaddr
New Jersey Tax Calendars: www.state.nj.us/treasury/taxation/njtaxcal
Tax Court of New Jersey: njcourts.gov/courts/tax.html?lang=eng
New Jersey Department of the Treasury: www.state.nj.us/treasury
New Jersey’s Tax Freedom Day is April 29th.