En español | New Jerseyans pay some of the country’s highest property and income tax rates, but the sales tax falls in the middle compared with other states, and there are numerous tax breaks for older adults. Though there’s no tax on Social Security, the Garden State does tax inheritances and most pensions.
New Jersey residents must file state taxes if they earned more than $10,000 individually or $20,000 if married filing jointly. There are seven brackets for single filers and eight for those who file jointly:
Source: New Jersey Department of the Treasury
* Taxable income: Gross income (wages, tips, bonuses, etc.) after subtracting for itemized or standard deductions
Source: New Jersey Department of the Treasury
Not all of your income is taxed at the same rate. For example, if you’re a single filer and earned $75,000 in taxable income, the first $20,000 is taxed at 1.4 percent, the next $20,001 to $35,000 is taxed at 1.75 percent, and so on.
Watch the video below to learn how to identify your 2022 federal income tax brackets.
Pension and annuity income and IRA and 401(k) withdrawals are taxable in New Jersey, with a few exceptions. See the New Jersey retirement income tax bulletin for more information.
Taxpayers who are 62 and older or have a disability, and whose total income is $150,000 or less, can exclude all or part of their retirement income. The amount of the exclusion depends on your income and filing status.
In some cases, the taxable amount you report for state tax purposes may be different from what appears on your federal return. For more information on how to calculate your taxable retirement income, visit the New Jersey Division of Taxation website.
AARP's Retirement Calculator can help you determine if you are saving enough to retire when — and how — you want.
Most investment income is taxed as regular income in New Jersey, but there are exceptions. For instance, interest earned on government bonds or tuition savings programs isn’t taxable. Check the state’s guide to nontaxable investment income for more information.
No. But you may pay federal taxes on a portion of your Social Security benefits, depending on your income. Up to 50 percent of your benefits will be taxed if you file an individual tax return and make $25,000 to $34,000 in total income — or if you file jointly and as a couple make $32,000 to $44,000 in total income. Up to 85 percent of your benefits will be taxed by the federal government if your total income is more than $34,000 individually or $44,000 as a couple.
AARP's Social Security Calculator can assist you in determining when to claim and how to maximize your Social Security benefits.
Property tax in New Jersey is a local tax that’s based on the value of your home, which is assessed annually by assessors in each municipality. The average property tax rate is 2.23 percent of the assessed value of your home, which is the highest rate in the country.
In New Jersey, counties decide what percentage of a home’s value is assessed, and all have chosen 100 percent of the home’s market value, according to the New Jersey Division of Taxation.
Residents of Bergen, Essex, Hunterdon, Morris, Passaic and Union counties pay some of the nation’s highest property taxes; they are among just 11 counties in the U.S. where the median property tax bill topped $10,000 in 2021, according to the Tax Foundation.
Find out more about how property taxes are calculated, whether you qualify for property tax relief, and how to appeal your assessment, on the New Jersey Division of Taxation’s website.
New Jersey phased out its estate tax in 2018, but the Garden State continues to levy an inheritance tax. The tax rate your heirs will pay depends on the size of the inheritance and their relationship to you.
For example, some immediate family members (including spouses, domestic partners, children, stepchildren, parents, grandparents and grandchildren) are exempt. Siblings, sons-in-law and daughters-in-law must pay a tax ranging from 11 to 16 percent on inheritances that exceed $25,000.
Nieces, nephews, cousins, friends and most other heirs are taxed 15 to 16 percent on inheritances of $500 or more.
New Jersey offers several tax relief programs for older residents and retirees:
New Jersey does not tax military pensions or survivor’s benefits, and honorably discharged veterans are eligible for an additional $6,000 exemption of their state income tax.
Military pay is taxable for New Jersey residents, even when stationed out of state. Combat pay has been exempt since tax year 2021.
If New Jersey wasn’t your permanent home when you entered the service, you’re not considered a resident for tax purposes, even if you are stationed in the state. For more information about taxes on military benefits, visit the New Jersey Division of Taxation website.
The deadline to file a New Jersey state tax return was April 18, 2023, which was also the deadline for federal tax returns. For help estimating your annual income taxes, use AARP's Tax Calculator.
The deadline to file for a six-month extension (until Oct. 16, 2023) has also passed. For details on how to file for future tax years, visit the New Jersey Division of Taxation website. You must request the extension on or before the original tax filing deadline and pay at least 80 percent of any taxes owed by that date to avoid a late filing penalty.
Next year's filing deadline is expected to be April 15, 2024. Check back for more information when it becomes available.
This guide was updated on Sept. 19, 2023 with new information about taxes in New Jersey. It was first published on Feb. 23, 2023.
Natalie Missakian is a contributing writer who covers federal and state policy. She previously worked as a reporter for the New Haven Register and daily newspapers in Ohio. Her work has also appeared in the AARP Bulletin and the Hartford Business Journal.
This story is provided by AARP New Jersey. Visit the AARP New Jersey page for more news, events, and programs affecting retirement, health care, and more.
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