Living in the Garden State often feels like a constant negotiation with your wallet. Between the property taxes that make everyone wince and the cost of a decent bagel, New Jerseyans are experts at sniffing out where their money is going. But when tax season rolls around, the confusion starts. People talk about "high taxes" in a general sense, yet they rarely nail down the specifics of how the math actually works here.
New Jersey doesn't just have one tax rate. That’s a total myth.
The state uses a graduated system. This means your income is chopped up into layers, and each layer is taxed at a different percentage. Honestly, it's more like a staircase than a flat fee. If you’re trying to figure out what is the new jersey income tax rate for the 2025 and 2026 tax years, you have to look at your filing status first.
The Reality of the Progressive Staircase
For most single filers in 2026, the rates start at a tiny 1.4% and climb all the way up to 10.75%.
Wait. Don't panic.
Just because you hit a high bracket doesn't mean your entire paycheck is taxed at that rate. If you earn $1,000,001, only that last dollar is getting hit with the 10.75% "millionaire tax." The rest of your money is still being taxed at the lower rates as it flows through the brackets.
Here is how the brackets generally shake out for a Single Filer or someone Married Filing Separately:
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- The first $20,000 of your income is taxed at 1.4%.
- The chunk between $20,001 and $35,000 gets hit at 1.75%.
- Earnings from $35,001 to $40,000 move up to 3.5%.
- That middle-income sweet spot of $40,001 to $75,000 is taxed at 5.525%.
- Anything from $75,001 to $500,000 jumps to 6.37%.
- The big jump happens after $500,000, where the rate is 8.97%.
- And finally, anything over $1 million is capped at 10.75%.
How Being Married Changes the Math
If you are Married Filing Jointly, or if you qualify as a Head of Household, the state gives you a bit more breathing room in those lower brackets. Basically, the "staircase" is wider. You can earn more money before you get bumped into the next percentage tier.
For a couple filing together:
The 1.4% rate covers everything up to $20,000. So far, same as the single filers. But then it changes. The 1.75% rate stays in effect all the way up to $50,000. For a single person, that rate ended at $35,000.
Then you hit a 2.45% bracket for income between $50,001 and $70,000. Single filers don't even have this bracket; they jump straight from 1.75% to 3.5%. It's a subtle nuance, but it saves families a few hundred bucks.
The 3.5% rate then applies from $70,001 to $80,000.
The 5.525% rate hits between $80,001 and $150,000.
The 6.37% rate applies from $150,001 to $500,000.
And the top two tiers—the 8.97% and 10.75%—kick in at the same $500k and $1 million marks respectively.
What People Get Wrong About New Jersey Taxes
One of the biggest misconceptions I hear is that New Jersey is the "highest-taxed state in the country." While our property taxes are indeed legendary (and not in a good way), our middle-class income tax rates are actually somewhat competitive with neighbors like New York.
New York's top rate is roughly 10.9%, and their brackets tend to be a bit more aggressive for middle earners.
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Another thing: New Jersey is actually pretty friendly to retirees. If you’re over 65, you might be able to exclude a massive chunk of your pension or IRA income from being taxed at all, provided your total income stays under certain limits (usually $150,000 or less). Also, Social Security benefits? Totally exempt. The state doesn't touch them.
The "Filing Threshold" Trick
There's a "gotcha" for low-income earners too. New Jersey has something called a filing threshold.
If you are a single filer and your gross income for the entire year is $10,000 or less, you don't owe a dime in state income tax. You might not even have to file, though you should if you had taxes withheld so you can get that money back.
For married couples filing jointly, that "zero tax" threshold is $20,000. If you earn $20,001, you suddenly owe tax on the whole amount based on the brackets. It’s a bit of a "cliff" effect that can surprise people working part-time or starting a small side hustle.
New Changes for 2026 and Beyond
Governor Murphy's FY 2026 budget, signed in mid-2025, kept the core income tax rates stable but shifted things elsewhere. You might have noticed your "sin taxes" going up—cigarettes and nicotine products got a price hike.
The state is also leaning heavily into property tax relief programs like ANCHOR and the newer Stay NJ program. These don't technically change what is the new jersey income tax rate, but they act as a "reverse tax." If the state sends you a check for $1,500 for property tax relief, your effective tax burden just dropped significantly.
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For 2026, the Stay NJ program is a big deal for seniors. It’s aiming to cut property taxes in half for many senior homeowners earning under $500,000, capped at a certain amount. This is a massive play to keep retirees from fleeing to Florida.
Credits That Actually Matter
Don't ignore the credits. A credit is better than a deduction because it’s a dollar-for-dollar reduction in what you owe.
- Child Tax Credit: New Jersey expanded this recently. If you have kids under 6, you could see a decent credit on your return.
- Earned Income Tax Credit (NJ EITC): This is for low-to-moderate-income working individuals and families.
- Wounded Warrior Caregivers Credit: A specific credit for those taking care of a relative who is a qualifying service member.
Actionable Steps for Your Next Return
Stop guessing and start prepping.
First, check your withholding. If you got a massive refund last year, you’re essentially giving the state a 0% interest loan. If you owed a lot, you might get hit with an underpayment penalty. Use the NJ Division of Taxation's withholding tables (Rate Tables A through E) to see if your employer is taking out the right amount.
Second, save your receipts for medical expenses. In NJ, you can deduct unreimbursed medical expenses that exceed 2% of your gross income. This is a much lower bar than the federal 7.5% limit, so more people actually qualify for it here.
Third, track your "Other Jurisdiction" taxes. If you live in Jersey but work in Philadelphia or New York City, you are likely paying taxes to those places. New Jersey usually gives you a credit for taxes paid to other states so you aren't double-taxed, but you have to fill out Schedule NJ-COJ correctly to claim it.
Finally, keep an eye on the ANCHOR deadlines. The state has been known to change the application windows, and missing out on that $450 to $1,500 check is just leaving money on the table.