New Jersey's income tax has a worse reputation than it deserves, and its property tax has exactly the reputation it deserves.
On income, New Jersey is mid-table. An $85,000 single filer pays $3,225 — less than New York, Massachusetts, Connecticut, Illinois or Virginia take at the same salary. The top rate of 10.75% is the third-highest in the country and it begins at a million dollars.
On property, New Jersey has the highest effective rate in the United States. For a homeowner that bill is very often three or four times the income tax figure above.
Take-home on $85,000 is $65,403.
A note before you start. This is general education, not tax advice. Federal figures are tax year 2026, from IRS Revenue Procedure 2025-32 and the Social Security Administration; New Jersey's brackets, exemption and retirement rules come from this site's own sourced 50-state dataset, citing N.J.S.A. Title 54A and the Division of Taxation's Form NJ-1040 instructions. Every dollar figure is computed by the same engine the site's calculators use, on a single filer with no dependents or pre-tax deferrals unless stated. Property tax is discussed qualitatively.
1. What New Jersey takes
| Amount on $85,000 | |
|---|---|
| Gross salary | $85,000 |
| Federal income tax | −$9,870 |
| Social Security (6.2%) | −$5,270 |
| Medicare (1.45%) | −$1,233 |
| New Jersey income tax | −$3,225 |
| Take-home | $65,403 |
Across incomes, single filer:
| Salary | New Jersey tax | Effective NJ rate | Take-home |
|---|---|---|---|
| $30,000 | $438 | 1.46% | $24,847 |
| $45,000 | $939 | 2.09% | $37,399 |
| $60,000 | $1,767 | 2.95% | $48,623 |
| $85,000 | $3,225 | 3.79% | $65,403 |
| $120,000 | $5,454 | 4.55% | $87,796 |
| $175,000 | $8,958 | 5.12% | $121,921 |
$438 at $30,000 is one of the lowest figures in this entire series — below Georgia's $749, Illinois's $1,340, Massachusetts's $1,280. New Jersey's schedule starts at 1.4% and stays cheap for a long way.
And the effective rate at $175,000 is 5.12%, against a headline top rate of 10.75%. The two numbers describe different people.
Run your own salary against New Jersey's brackets2. Eight brackets, and one that single filers never use
| Taxable income above | Single | Married joint / HoH |
|---|---|---|
| 1.4% | $0 | $0 |
| 1.75% | $20,000 | $20,000 |
| 2.45% | — | $50,000 |
| 3.5% | $35,000 | $70,000 |
| 5.525% | $40,000 | $80,000 |
| 6.37% | $75,000 | $150,000 |
| 8.97% | $500,000 | $500,000 |
| 10.75% | $1,000,000 | $1,000,000 |
Look at the 2.45% row. For a single filer the 2.45% and 3.5% thresholds are both $35,000, which means the 2.45% bracket has zero width for single filers — it exists only on the joint and head-of-household schedules. That is a real feature of New Jersey's rate tables, not a data error.
Notice also that the two top brackets are NOT doubled for a couple. The 8.97% rate starts at $500,000 and the 10.75% at $1,000,000 for every filing status. Two spouses each earning $600,000 face the 8.97% rate where two single people in the same positions would not — the same marriage penalty Massachusetts's surtax produces.
For a single filer on $85,000: $1,000 sheltered, $84,000 taxable, and the walk runs $20,000 at 1.4%, $15,000 at 1.75%, $5,000 at 3.5%, $35,000 at 5.525% and $9,000 at 6.37% — $3,225.
The $1,000 exemption is the only across-the-board subtraction. New Jersey has no standard deduction. N.J.S.A. 54A:3-1 provides $1,000 "which may be taken as a deduction from his New Jersey gross income," and the married-joint $2,000 is two exemptions rather than a separately legislated amount.
Dependents add $1,500 each, which is more than the taxpayer's own exemption — an unusual ordering.
One detail worth naming: the second exemption on a joint return is available for a taxpayer's spouse, civil union partner, or domestic partner — the last being explicit in 54A:3-1(b)(1) and unusual among the states.
3. Eighteen categories of income that cannot offset each other
This is New Jersey's most distinctive structural feature and it costs people real money.
N.J.S.A. 54A:5-1 defines New Jersey gross income as eighteen coequal categories — wages, net profits from business, net gains from disposition of property, rents, dividends, interest, and so on.
Losses in one category generally cannot offset gains in another.
Two consequences follow, and both run against the taxpayer:
A business loss does not shelter your salary. In the federal system a Schedule C loss reduces adjusted gross income and therefore reduces tax on wage income. In New Jersey it does not — the loss stays inside its category.
A capital loss does not shelter your salary either. Federally you can deduct up to $3,000 of net capital loss against ordinary income and carry the rest forward. New Jersey allows netting within the gains category and does not allow the excess to reach your wages.
For someone with a side business, a rental property, or an active portfolio, this is the single most important thing to understand about New Jersey's income tax. It is the reason a New Jersey return can show tax due in a year the federal return shows a loss.
Capital gains themselves get no preferential rate. Net gains from disposition of property is one of the eighteen coequal categories, with no separate rate table, no exclusion percentage and no holding-period discount.
4. Filing jointly
| Salary | Single NJ tax | Joint NJ tax | Difference |
|---|---|---|---|
| $30,000 | $438 | $420 | $18 |
| $45,000 | $939 | $683 | $256 |
| $60,000 | $1,767 | $1,001 | $766 |
| $85,000 | $3,225 | $1,811 | $1,414 |
| $120,000 | $5,454 | $3,745 | $1,709 |
| $175,000 | $8,958 | $6,978 | $1,980 |
The benefit grows steeply, because the middle brackets are genuinely doubled where the low ones are not. At $30,000 the couple saves $18 — both filers are inside the 1.4% and 1.75% bands, which have identical thresholds. By $85,000 the saving is $1,414.
$1,414 is a large joint benefit — larger than Minnesota's $1,264 and Hawaii's $1,587 is not far above it. It is the eight-bracket schedule doing its work.
5. What the paycheck actually looks like
On $85,000 as a single filer:
| Pay schedule | Gross per cheque | Net per cheque |
|---|---|---|
| Weekly (52) | $1,634.62 | $1,257.75 |
| Biweekly (26) | $3,269.23 | $2,515.50 |
| Semi-monthly (24) | $3,541.67 | $2,725.12 |
| Monthly (12) | $7,083.33 | $5,450.25 |
Biweekly and semi-monthly are not the same thing. Biweekly is 26 cheques — every other Friday — so two months a year carry three paydays. Semi-monthly is 24, on fixed dates, so every month carries exactly two. The annual total is identical; the monthly cash flow is not, and a biweekly earner budgeting on "two cheques a month" is under-counting by $5,031 a year.
Three other New Jersey lines on your pay stub, none of which is income tax and none of which is in the figures above:
Unemployment insurance and workforce development contributions, withheld from employee wages up to a taxable wage base.
Temporary Disability Insurance, New Jersey's state short-term disability programme.
Family Leave Insurance, funding paid family leave.
Together those are a meaningful additional deduction, and they are one reason a New Jersey pay stub looks busier than a Pennsylvania one across the river. They also buy coverage that Pennsylvania does not provide, so a pure take-home comparison counts the cost and misses the benefit.
6. No municipal income tax
No New Jersey municipality imposes a personal income or earnings tax.
The reasoning is structural. New Jersey municipalities have no inherent taxing power and may levy only what the Local Tax Authorization Act (N.J.S.A. 40:48C-1 et seq.) authorises — and that act's reach does not extend to a general personal income tax.
Newark's payroll tax is not a counterexample. It is levied on employers, based on payroll, rather than on employees' income. It does not appear on your pay stub and it does not reduce your take-home. It is part of what you cost your employer, in the same way Colorado's occupational privilege tax employer share is.
A New Jersey take-home figure is complete as stated, which is a genuine advantage against New York City and Philadelphia — both a commute away, and both levying a local income tax that New Jersey has no equivalent to.
That comparison is the one that matters for a great many New Jerseyans, and it runs strongly New Jersey's way for a resident. Working in New York or Philadelphia is a different question — those states tax nonresident income at source, and New Jersey gives a credit for tax paid to another jurisdiction rather than exempting it.
7. Property tax, which is the actual New Jersey tax story
New Jersey has the highest effective property tax rate in the United States, and it is not close.
The scale, against the income tax in section 1. An $85,000 single filer pays $3,225 of state income tax. The average New Jersey property tax bill runs several times that figure, and in the higher-cost northern counties considerably more.
Three reasons:
New Jersey funds schools locally to an unusual degree, across more than 500 school districts in a state of nine million people.
It has 564 municipalities, each with its own government, and consolidation has proved politically impossible for a century.
With no local income tax and a limited local sales tax option, property is the only base local government can reach. Section 6's advantage — no municipal income tax — is the direct cause of section 7's problem.
Relief exists and is claimed rather than automatic. New Jersey operates the ANCHOR property tax relief programme for homeowners and renters, the Senior Freeze (Property Tax Reimbursement) for eligible older residents, and a property tax deduction or credit on the income tax return. All three are applied for, and eligibility rules and amounts change — checking them is worth more than anything else in this article for a New Jersey homeowner.
Renters get less but not nothing: ANCHOR includes a renter benefit, and the income tax return allows a deduction for a portion of rent as property tax paid.
8. Retirement: a large exclusion with a hard cliff
Social Security is 100% exempt, and the statute is unusually clean. N.J.S.A. 54A:6-2, quoted complete and never amended since 1976: "All payments received under the Federal Social Security Act, whether they be regularly monthly benefits or lump sum death benefits." No provisional-income formula, no phase-in, no income cap.
Military pensions are 100% exempt with no age and no income test — N.J.S.A. 54A:6-26. The unconditional part was won by amendment; older sources may describe conditions that no longer apply.
The pension and retirement income exclusion is New Jersey's main event, under N.J.S.A. 54A:6-10:
| Filing status | Exclusion |
|---|---|
| Married filing jointly | $100,000 |
| Single | $75,000 |
| Head of household | $75,000 |
| Married filing separately | $50,000 |
Available at age 62 or over, or on Social Security-defined disability.
Two things that decide most cases
The income limit is $150,000, and it is a cliff. Above $150,000 of income the exclusion is unavailable — not reduced, unavailable. A retiree at $149,999 excludes up to $75,000; one at $150,001 excludes nothing. The cost of crossing that line is far larger than the dollar that crossed it.
Head of household takes the SINGLE amount while using the JOINT bracket schedule. That combination is unusual — most states keep a filing status consistent across both — and it means a head-of-household retiree gets $75,000 of exclusion, not the $100,000 their bracket schedule might imply.
| Retirement income at 62+, single, income under $150,000 | New Jersey tax |
|---|---|
| $40,000 all Social Security | $0 |
| $40,000 all 401(k) withdrawals | $0 |
| $70,000 — $30,000 SS + $40,000 401(k) | $0 |
Below the $150,000 cliff and above age 62, New Jersey is effectively a no-income-tax state for retirees. That is a much better answer than its working-age reputation suggests, and it is a large part of why the state's retiree tax ranking has improved.
Below 62 there is no exclusion, so an early retiree pays the ordinary rates on a 401(k) withdrawal.
9. Where New Jersey ranks
At $85,000, New Jersey's $3,225 is twenty-first of the 41 income-tax states — almost exactly the median.
| State | Tax on $85,000 |
|---|---|
| Colorado | $3,032 |
| Missouri | $3,058 |
| New Jersey | $3,225 |
| Oklahoma | $3,280 |
| South Carolina | $3,320 |
Against its neighbours:
| Salary | NJ | NY | PA | DE | CT |
|---|---|---|---|---|---|
| $30,000 | $438 | $1,023 | $921 | $988 | $425 |
| $45,000 | $939 | $1,833 | $1,382 | $1,821 | $1,775 |
| $85,000 | $3,225 | $3,993 | $2,610 | $4,269 | $3,925 |
| $175,000 | $8,958 | $9,285 | $5,373 | $10,209 | $9,250 |
New Jersey is cheaper than New York, Delaware and Connecticut at every level shown, and cheaper than Pennsylvania only below about $50,000 — Pennsylvania's flat 3.07% from the first dollar is expensive at low incomes and cheap at high ones.
Pennsylvania takes $615 less at $85,000 and $3,585 less at $175,000. For someone choosing between Bucks County and Mercer County, that is the income tax half of the comparison — and New Jersey's property tax runs the other way by considerably more.
10. RetireReady NJ
New Jersey runs a live auto-IRA mandate. Employers with 25 or more employees that do not offer a qualifying retirement plan must enrol staff in RetireReady NJ, at a 3% default deferral, with a penalty of $250 per employee for non-compliance.
Note the 25-employee threshold, which is considerably higher than the five used by Colorado, Connecticut, Illinois, Maine and Minnesota. A New Jersey worker at a company of ten is not covered, where the same worker in Connecticut would be.
For an employee: you are enrolled by default and may opt out. It is a Roth IRA, so contributions are after tax and do not reduce your taxable income — the figures in this article are unaffected.
11. What you can control
Pre-tax deferrals save 6.37% at state level for an $85,000 earner. A $10,000 traditional 401(k) contribution saves $2,200 federally plus $637 in New Jersey tax.
And if you retire in New Jersey after 62 and under the $150,000 cliff, that 6.37% is saved permanently — the exclusion in section 8 covers the withdrawal. That makes the traditional-over-Roth case strong here, subject entirely to staying under the cliff.
HSA contributions through payroll cut federal tax, New Jersey tax and FICA. On $4,400 that is roughly $968 federal, $280 New Jersey and $337 FICA — about $1,585, or 36% of the amount contributed.
Do not count on a business or capital loss to shelter salary. Section 3 is the reason, and it is the most common New Jersey planning error.
Claim the property tax relief. ANCHOR, the Senior Freeze and the income tax property tax deduction or credit are all applied for. Given the size of a New Jersey property tax bill relative to the income tax, that is where the money is.
Frequently asked questions
What is New Jersey's income tax rate? Eight brackets from 1.4% to 10.75%. An $85,000 single filer tops out at 6.37%; the 10.75% rate begins at a million dollars of taxable income.
What is take-home pay on $85,000 in New Jersey? $65,403 for a single filer, after $9,870 federal income tax, $6,503 FICA and $3,225 New Jersey income tax.
Does New Jersey have a standard deduction? No. A $1,000 personal exemption is the only across-the-board subtraction — $1,500 per dependent, which is more than the taxpayer's own. The low opening brackets do the sheltering instead.
Why can't my business loss reduce my New Jersey tax on wages? Because New Jersey defines gross income as eighteen coequal categories under N.J.S.A. 54A:5-1, and losses in one category generally cannot offset gains in another. It is the most consequential structural difference from the federal system.
Can a New Jersey municipality tax my income? No. Municipalities may levy only what the Local Tax Authorization Act permits, which does not include a general income tax. Newark's payroll tax is levied on employers, not employees.
Does New Jersey tax Social Security? No, 100% exempt under a 1976 statute that has never been amended — no formula, no phase-in, no income cap.
How does the New Jersey pension exclusion work? $75,000 single, $100,000 married filing jointly, $50,000 married filing separately, from age 62 — but only if your income is $150,000 or less. Above that it disappears entirely rather than tapering. Head of household takes the single $75,000 while using the joint bracket schedule.
Is New Jersey a high-tax state? On income tax it is exactly mid-table — twenty-first of forty-one at $85,000, and cheaper than New York, Connecticut and Delaware. On property tax it has the highest effective rate in the country, and for a homeowner that is by far the larger bill.
What to do next
New Jersey's income tax is gentler than its reputation and its property tax is worse. If you own here, the relief programmes are where the money is; if you are 62 or over, the $150,000 cliff is the number to plan around.
- New Jersey take-home pay calculator — your salary with every deduction shown separately.
- New Jersey mortgage calculator — where the property tax line does the real work.
- Your Paycheck in the USA in 2026 — all fifty states on one salary.
- Take-Home Pay in Pennsylvania — cheaper on income above $50,000, and with a local layer New Jersey lacks.
- 50/30/20 budget calculator — built on take-home rather than salary.
Every figure on this site is sourced and dated. How we source every number.
Figures in this article are illustrations computed by this site's own tax engine for tax year 2026, on a single filer with no dependents or pre-tax deferrals unless stated. Federal figures come from IRS Revenue Procedure 2025-32 and the Social Security Administration; New Jersey's brackets, exemption, category rules, retirement exclusion and RetireReady mandate from this site's sourced 50-state dataset, citing N.J.S.A. Title 54A and the New Jersey Division of Taxation. Unemployment, disability and family leave contributions, property tax and the ANCHOR and Senior Freeze programmes are discussed qualitatively rather than computed. This is general education and not tax advice; consult a licensed tax professional for your own situation.