New Jersey: 10.75% Top Marginal State Income Tax Rate
New Jersey has one of the highest state income tax rates in the country, with a top marginal rate of 10.75% on income over $1 million. The state uses a graduated bracket structure, and for income in the $75k to $500k range, marginal rates run from 6.37% to 8.97%. New Jersey is part of the New York metro area labor market, where high state taxes on both sides of the Hudson River are a significant factor in compensation analysis.
Approximate New Jersey state income tax at $150,000 gross: effective rate ~5.8% at this income level = ~$8,800. Actual varies with deductions, filing status, and specific bracket calculations.
At $150,000 in taxable income, New Jersey's effective state income tax rate is approximately 5.5 to 6.5%, resulting in roughly $8,000 to $10,000 in state taxes. The marginal rate at that income level is 6.37%. These rates rise steeply at higher income levels: for a $500k earner, the marginal rate hits 8.97%.
New Jersey also has a local payroll tax in Newark (1% on wages) and significant property taxes, the highest effective property tax rate of any state in the US. For homeowners, the combined state tax burden in New Jersey can be among the highest in the country. For renters or high-income earners primarily concerned with income tax, the comparison with neighboring New York or with no-tax states like Florida is the most relevant.
New Jersey's proximity to New York City makes it a common residence for NYC-employed professionals. New Jersey residents who work in New York City pay New York state income tax on NYC-sourced income. The New Jersey tax credit partially offsets this but does not eliminate double-state exposure. Understanding the full residency and work location tax picture is important for NYC-area professionals.
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Total Comp CalculatorFrequently asked questions: New Jersey income tax
What is New Jersey's state income tax rate in 2026?
New Jersey uses graduated brackets. The top marginal rate is 10.75% on income over $1 million. For income in the $75k to $500k range common for professionals, the marginal rate is 6.37% to 8.97%. The effective rate (average across all income) at $150k is roughly 5.5 to 6.5%.
Do New Jersey residents who work in New York City pay both NJ and NY taxes?
Generally yes, but with a credit. New Jersey residents working in NYC pay New York state (and city) income tax on NYC-sourced income. New Jersey provides a credit for taxes paid to another state, which partially offsets the double exposure. The net result is usually paying the higher of the two states' rates, not both in full, but the credit mechanics are complex and a tax advisor should be consulted for your specific situation.
Tax rates shown reflect the best available 2026 information and are provided for informational purposes only. State income tax rates, brackets, and rules change frequently. This page is not tax advice. Consult a qualified tax professional for advice specific to your situation. © CompCalc — compensationcalculator.xyz