If you work in New Jersey, you might notice a small deduction labeled “NJ UI” or “Unemployment Insurance” on your pay stub.
This deduction funds the state’s unemployment insurance program, which provides benefits to workers who lose their jobs through no fault of their own.
It’s a small amount—but it does reduce your take-home pay slightly. Let’s look at what it means, how it’s calculated, and what it actually costs you per paycheck.
What Is Unemployment Insurance (UI) in New Jersey?
Unemployment Insurance (UI) is a state-run safety net program that temporarily replaces a portion of your income if you lose your job.
Both employers and employees contribute to this fund through payroll taxes.
As an employee, your share of this tax is automatically withheld by your employer—just like state income tax or Social Security contributions.
Unlike federal taxes, which depend on your income bracket, New Jersey’s UI rate is flat up to a certain wage limit, meaning everyone pays the same percentage on the same income base.
If you want a full view of your New Jersey paycheck after taxes, try using your site’s New Jersey paycheck calculator for a personalized breakdown.
The 2025 New Jersey UI Rate and Wage Base
For 2025, the employee contribution rate for New Jersey UI is 0.3825%, and it applies to the first $43,300 of your annual wages.
After your earnings exceed that amount, no more UI deductions are taken out for the rest of the year.
Here’s what that means in practice:
| Gross Annual Income | UI Rate (0.3825%) | Annual UI Deduction |
|---|---|---|
| $30,000 | 0.3825% | $114.75 |
| $50,000 | 0.3825% (on first $43,300) | $165.49 |
| $75,000 | capped at $43,300 | $165.49 |
| $100,000 | capped at $43,300 | $165.49 |
So even if you earn six figures, your maximum UI contribution for 2025 will be about $165.
You’ll often see this deduction listed as “NJ UI/WF” (Unemployment Insurance + Workforce Development) on your paycheck
How Much Does It Affect Your Take-Home Pay?
For most New Jersey employees, UI deductions make a very small dent in your paycheck.
Here’s an example for someone earning $2,000 biweekly:
| Pay Period | Gross Pay | UI Deduction (0.3825%) | Net Impact |
|---|---|---|---|
| Biweekly | $2,000 | $7.65 | You take home $1,992.35 (before other taxes) |
While it’s a small amount, UI is one of several state payroll deductions that reduce your take-home pay slightly.
Other New Jersey-specific deductions include:
| Deduction | Typical 2025 Rate | Purpose |
|---|---|---|
| Disability Insurance (DI) | 0.47% | Covers income loss from illness/injury |
| Family Leave Insurance (FLI) | 0.09% | Paid leave for family or child care |
| Workforce Development Fund | 0.0425% | Supports job training programs |
All combined, these deductions usually equal around 1% of your paycheck—small, but worth noting in your overall gross-to-net calculation.
You can check the full breakdown using a New Jersey paycheck deductions calculator.
What Happens When You Reach the Wage Cap?
Once your year-to-date earnings hit $43,300, your employer stops withholding UI contributions.
This means you’ll see your take-home pay increase slightly—around $7–$8 more per paycheck for the rest of the year.
If you work multiple jobs in New Jersey and exceed the wage cap across employers, you may be eligible for a refund of excess UI contributions. You can request this through the New Jersey Division of Taxation by filing Form NJ-2450.
Why You Pay Into the UI Fund
Think of UI as a shared insurance plan. Everyone contributes a small amount, but only those who lose their jobs and qualify for benefits draw from it.
Your contributions ensure the system is well-funded, and they make you eligible to claim unemployment benefits if you’re ever laid off.
It’s not just a deduction—it’s protection for your future.
How to Check Your Pay Stub for UI Deductions
You can verify your UI contribution at any time by looking at your pay stub.
Here’s what to look for:
- Line item labeled “NJ UI” or “UI/WF”
- The deduction amount (should be around 0.38% of gross pay)
- Year-to-date total—should stop increasing once you reach about $165 for 2025
If your deduction exceeds the cap, contact your payroll department or the NJ Division of Taxation to verify or request a refund.
For more insights into paycheck breakdowns, see the gross-to-net calculator to understand how all state deductions add up.
FAQs: New Jersey Unemployment Insurance and Paychecks
1. What is the current employee UI rate in New Jersey?
The 2025 rate is 0.3825% of the first $43,300 in wages.
2. How much does UI reduce my paycheck?
For most workers, about $7–$8 per paycheck depending on pay frequency.
3. What happens when I hit the wage base cap?
UI deductions stop for the rest of the year once you’ve paid the maximum contribution.
4. Do dependents or filing status affect UI deductions?
No, UI is a flat-rate contribution that doesn’t change based on dependents or marital status.
5. Can I get a refund if I pay too much?
Yes. If you work multiple jobs and exceed the annual UI limit, file Form NJ-2450 with the state to request a refund.
Final Thoughts
Your New Jersey unemployment insurance deduction is one of the smallest taxes on your paycheck—less than half a percent—but it funds a vital program that supports workers when they need it most.
It’s worth checking your pay stub each year to make sure the deductions stop after you reach the cap, and to understand how all your state payroll deductions impact your take-home pay.
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Juanita is the creator behind njpaycheckcalculator.org, dedicated to providing accurate and easy-to-use paycheck calculation tools for New Jersey residents. With a strong focus on clarity and reliability, she helps users understand their paychecks and tax deductions with confidence. Juanita is passionate about simplifying complex financial calculations, empowering users to make informed decisions about their income and budgeting.