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Official Tax Guide

New Jersey Taxes 2025: Income, Sales, and Property Tax Guide

Complete guide to New Jersey state taxes. Income tax (1.4% - 10.75%), sales tax, and what you need to know before moving.

Updated January 15, 2026
5 min read

New Jersey State Tax Guide 2025

Relocating to New Jersey involves understanding the state's tax landscape. New Jersey is known for high property taxes and a progressive income tax system. This guide provides an overview of key taxes for new residents.

1. Income Tax

New Jersey utilizes a progressive income tax system. This means tax rates increase as your taxable income rises. Unlike a flat tax, which charges the same rate regardless of income, New Jersey's brackets ensure higher earners pay a higher percentage.

Tax Rates (2025 Brackets):
New Jersey's tax rates range from 1.4% to 10.75%. The specific rate you pay depends on your filing status (single, married filing jointly, etc.) and your taxable income level.

  • Residents: You must file a New Jersey tax return if you are a resident and your income exceeds the state's threshold for your filing status.
  • Taxable Income: The tax is applied to your New Jersey gross income, which starts with your federal adjusted gross income (AGI) with specific state modifications.

2. Sales Tax

The statewide sales tax rate is 6.625%.

  • Local Taxes: New Jersey does not permit additional local sales taxes (like counties or cities adding a percentage on top of the state rate). Therefore, the rate is uniform at 6.625% throughout the state.
  • What is Taxed: Most retail goods and many services are subject to sales tax. However, New Jersey offers specific exemptions, such as:
    • Clothing and footwear under $100 per item.
    • Unprocessed food (groceries).
    • Purchases made by certain exempt organizations.

3. Property Tax

New Jersey consistently ranks among the states with the highest property taxes in the nation. While specific rates vary significantly by municipality and county, the burden is generally high compared to the national average.

  • Primary Revenue Source: Unlike many states that rely heavily on income or sales tax, New Jersey uses property taxes primarily to fund local government services, public schools, and police/fire departments.
  • Taxing Authorities: The tax is levied by local jurisdictions (towns, counties, and school districts). There is no single statewide property tax rate.
  • Relief Programs: New Jersey offers various property tax relief programs for homeowners and renters, such as the "Stay NJ" program and the "ANCHOR" (Affordable New Jersey Communities for Homeowners and Renters) program, which provide rebates based on income and residency.

4. Other Taxes

Beyond income, sales, and property taxes, new residents should be aware of the following:

  • Gas Tax: New Jersey imposes a gasoline tax. While historically lower than neighboring states, rates are adjusted annually based on a formula. As of 2025, expect a state tax included in the price per gallon.
  • "Sin" Taxes: New Jersey taxes specific goods at higher rates, including:
    • Alcohol: Excise taxes vary based on the type and alcohol content.
    • Tobacco/Nicotine: High excise taxes apply to cigarettes, cigars, and vaping products.
  • Inheritance Tax: New Jersey is one of the few states that imposes an inheritance tax (tax paid by the person receiving the assets), rather than an estate tax (tax paid by the estate before distribution). This applies to transfers of real or personal property to certain beneficiaries (e.g., siblings, nieces, nephews, friends). Transfers to spouses and direct descendants (children/grandchildren) are generally exempt.
  • Estate Tax: New Jersey repealed its estate tax in 2018. There is currently no New Jersey estate tax.

5. Retiree Taxes

Retirees moving to New Jersey should plan carefully, as the state taxes certain types of retirement income.

  • Pension and Annuity Income: New Jersey generally taxes income from private pensions and annuities. However, there are exemptions available based on age and income thresholds. For example, a portion of retirement income may be excluded from taxation if the retiree meets specific criteria.
  • Social Security: New Jersey does not tax Social Security benefits.
  • 401(k) and IRA Distributions: Distributions from 401(k)s and IRAs are generally taxable in New Jersey, though exemptions may apply similar to pension income.
  • Senior Freeze (Property Tax): Eligible senior citizens and disabled persons may qualify for the "Property Tax Reimbursement" program, which reimburses the difference between the base year property tax and the current year tax.

6. Comparison to Neighbors

  • New York: New York has a higher top income tax rate (10.9% for high earners) and a higher sales tax rate (8.875% in NYC). However, property taxes in parts of New York can be lower than in New Jersey suburbs.
  • Pennsylvania: Pennsylvania has a flat income tax rate (3.07%) which is significantly lower than New Jersey's top rate. Sales tax is also lower (6-7% depending on location). However, property taxes can be comparable in certain areas.
  • Connecticut: Connecticut has a progressive income tax (top rate 6.99%) and a sales tax of 6.35%. Property taxes vary but are generally lower than in New Jersey.

DISCLAIMER: Tax laws change frequently and are subject to interpretation. The information provided in this guide is for general educational purposes only and does not constitute professional tax advice. You should consult with a Certified Public Accountant (CPA) or tax attorney regarding your specific financial situation before making any relocation or tax decisions.