New Jersey State Taxes – Forbes Advisor

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The state of New Jersey requires you to pay taxes if you are a resident or nonresident that receives income from a New Jersey source. The state income tax rates range from 1.4% to 10.7%, and the sales tax rate is 6.625%.

New Jersey state offers tax deductions and credits to reduce your tax liability, including deductions for medical, alimony, and self-employed health insurance expenses. The state also offers tax credits, including the earned income tax credit and child and dependent care credit.

New Jersey Income Tax Brackets and Rates: Single or Married/Civil Union Partner Filing Separately

New Jersey Income Tax Brackets and Rates: Married/Civil Union filing jointly, Qualified Widow(er) and Head of Household

New Jersey Income Tax Deductions

Medical Deductions

You may deduct medical expenses you paid during the year for yourself, your spouse or domestic partner, and your dependents. You can only deduct medical expenses that exceed 2% of your income. Allowable medical expenses include payments for doctor visits, medicine, insurance premiums, and other costs. You can’t deduct expenses you were reimbursed for.

Alimony Deductions

You can deduct any court-ordered alimony payments on your tax return, but you can’t deduct child support payments.

Self-Employed Health Insurance Deductions

You can deduct the amount you paid for health insurance if you’re considered self-employed for federal tax purposes or earn wages as an S corporation, in which you were more than a 2% shareholder. You can claim the amount you paid for yourself, spouse, civil union partner, domestic partner or dependents.

New Jersey State Income Tax Credits

Earned Income Tax Credit

​​You can claim the New Jersey Earned Income Tax Credit (NJEITC) if you’re eligible for the federal EITC, which is a refundable tax credit. Your NJEITC is 40% of your federal earned income tax credit amount. For example, if your federal earned income tax credit is $4,000, you may qualify for a NJEITC of $1,600.

The Child and Dependent Care Credit

You can claim the child and dependent care credit if you qualify for the federal child and dependent care credit and your New Jersey income is less than $60,000. The credit is nonrefundable and is worth up to $500 per child or $1,000 for two or more children.

You may qualify if you paid someone to care for your child under the age of 13, a spouse or dependent who lived with you for more than ½ of the year and can’t physically or mentally care for themselves.

Your New Jersey child and dependent care credit is a percentage of your federal child and dependent care credit based on your New Jersey’s income as follows:

Do I Have to Pay Income Tax in New Jersey?

You are required to file a New Jersey tax return if your income exceeds certain thresholds depending on your filing status and you fall into one of the following categories:

New Jersey Residency Status

You’re considered a resident of New Jersey if you reside within the state or you have a permanent home and spend more than 183 days there. You’re not considered a resident if one of the following applies to you:

  • You didn’t maintain a permanent residence in New Jersey
  • You maintained a permanent residence outside of New Jersey
  • You didn’t spend more than 30 days in New Jersey

Sales Tax and Sales Tax Rates

New Jersey charges a sale and use tax of 6.625%.

Property Tax and Exemptions

New Jersey assesses a property tax on real estate and provides a property tax exemption to homeowners, veterans, senior citizens, religious and educational agencies, historic properties, and government agencies.

Capital Gains Taxes

New Jersey allows taxpayers to report gains and losses from the sale of capital assets. All of your capital gains are subject to taxes.

Inheritance and Estate Tax and Inheritance and Estate Tax Exemption

New Jersey has an inheritance tax. When a person dies, the assets are transferred from the deceased dies to the beneficiary, and the state of New Jersey may impose a tax on the transfer of assets.

New Jersey stopped administering an estate tax as of Jan. 1, 2018.

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