Running payroll in New Jersey isn’t just about paying your employees — it’s about staying compliant with both federal and state tax rules. For small business owners, understanding how to calculate payroll correctly can save money, prevent penalties, and ensure your team gets paid accurately and on time.
This guide walks you through every step: from gross pay to withholdings and employer costs.
What Payroll Calculation Means for a New Jersey Small Business
When you process payroll in New Jersey, you’re calculating both employee withholdings (the amounts taken out of each paycheck) and employer contributions (the extra taxes you pay on top of wages).
Each pay cycle includes:
- Gross pay — total earnings before deductions.
- Employee withholdings — federal income tax, FICA, and New Jersey state income tax.
- Employer taxes — unemployment insurance, disability insurance, and family leave contributions.
- Net pay — the amount the employee actually receives.
If you’d like to estimate pay after taxes, you can use our New Jersey payroll tax calculator or the gross-to-net paycheck calculator.
Step 1: Register as an Employer in New Jersey
Before calculating payroll, you need to register with the New Jersey Division of Taxation. This gives you an employer tax ID used to report and pay withholding taxes.
You’ll also register for:
- Unemployment Insurance (UI)
- Disability Insurance (TDI)
- Family Leave Insurance (FLI)
You can complete registration through the NJ Business Gateway. Once approved, you’ll receive your employer account numbers for state tax filing.
Step 2: Calculate Gross Wages
Your payroll starts with gross pay, which includes:
- Hourly wages or annual salary
- Overtime pay
- Commissions, tips, and bonuses
For example:
- An hourly employee working 40 hours at $25/hour = $1,000 gross pay
- Add overtime at 1.5 × regular rate if applicable
Step 3: Withhold Federal and State Payroll Taxes
You must withhold both federal and state taxes from each employee’s paycheck.
Federal Withholdings
- Federal income tax (based on employee’s W-4)
- Social Security: 6.2% of wages (up to $168,600 in 2025)
- Medicare: 1.45% (no wage limit)
New Jersey State Withholdings
New Jersey’s state income tax rates for 2025 range from 1.4% to 10.75%, depending on the employee’s taxable income.
| Taxable Income (Single) | Tax Rate |
|---|---|
| $0 – $20,000 | 1.4% |
| $20,001 – $35,000 | 1.75% |
| $35,001 – $40,000 | 3.5% |
| $40,001 – $75,000 | 5.525% |
| $75,001 – $500,000 | 6.37% |
| $500,001 – $1,000,000 | 8.97% |
| Over $1 million | 10.75% |
Employees fill out Form NJ-W4 to declare their filing status and allowances. You can learn how to complete it correctly in our article on setting up the NJ-W4 for your paycheck.
Step 4: Deduct Additional State Contributions
In New Jersey, employees also contribute to statewide insurance programs:
| Program | Who Pays | Approx. 2025 Rate |
|---|---|---|
| Unemployment Insurance (UI) | Employer + Employee | 0.425% (employee on first $43,100 wages) |
| Temporary Disability Insurance (TDI) | Employer + Employee | 0.47% (employee on first $161,000 wages) |
| Family Leave Insurance (FLI) | Employee Only | 0.09% (on first $161,000 wages) |
Employers withhold the employee portion each pay period and remit it with payroll taxes.
Step 5: Calculate Employer Payroll Costs
As an employer, your payroll cost goes beyond wages. You pay:
- Employer share of Social Security (6.2%) and Medicare (1.45%)
- NJ Unemployment Insurance (SUTA) contributions (rate varies by experience rating)
- Employer-side TDI contributions
- Workers’ Compensation insurance premiums
Example – Employer Cost Breakdown
For a full-time employee earning $50,000 annually:
| Cost Type | Employer Rate | Approx. Annual Cost |
|---|---|---|
| Social Security | 6.2% | $3,100 |
| Medicare | 1.45% | $725 |
| NJ Unemployment Insurance | 1.2% | $600 |
| TDI | 0.47% | $235 |
| Workers’ Comp | varies (~1%) | $500 |
| Total Employer Payroll Cost | — | ≈ $5,160 (≈ 10.3%) |
That means each $50,000 salary actually costs the small business about $55,000 after taxes and insurance
Step 6: Compute Net Pay
Subtract all employee withholdings from gross pay to determine net pay (the take-home amount).
Example:
| Item | Amount |
|---|---|
| Gross Pay | $2,000 |
| Federal Tax | $150 |
| Social Security + Medicare | $153 |
| NJ State Income Tax | $90 |
| Employee Insurance (TDI + FLI + UI) | $30 |
| Net Pay | $1,577 |
You can use the New Jersey salary paycheck calculator to double-check your net pay per pay period.
Step 7: File and Remit Payroll Taxes
- State Income Tax and Contributions: remit via NJ Division of Taxation portal.
- Federal Taxes: deposit through the IRS EFTPS system.
- Quarterly Reports: file Form WR-30 and Form NJ-927.
- Annual Reports: issue W-2s to employees and submit state copies.
Keeping a payroll calendar ensures you meet New Jersey’s filing deadlines and avoid late penalties.
Common Payroll Mistakes Small Businesses Should Avoid
- Forgetting to register for NJ withholding before paying employees.
- Using federal W-4 data without collecting the NJ-W4 form.
- Misclassifying workers (contractor vs employee).
- Missing quarterly state filing deadlines.
- Not tracking wage bases for UI, TDI, and FLI limits.
“Use our New Jersey Payroll Tax Calculator to simplify payroll tax calculations for your business.”
“Check the New Jersey Withholding Rate for Paychecks to ensure accurate employee deductions.”
“Explore the New Jersey FICA Calculator to include Social Security and Medicare taxes in your payroll.”
“Learn about Payroll Taxes Employers Pay in New Jersey to stay compliant with state requirements.”
“Understand how New Jersey Unemployment Insurance Affects Payroll for small businesses.”
“Estimate employee net pay with our Gross-to-Net Paycheck Calculator.”
FAQs About New Jersey Small Business Payroll
1. What payroll taxes do small businesses pay in New Jersey?
Federal (FICA + FUTA), state withholding, UI, TDI, FLI, and Workers’ Comp insurance.
2. How often do I need to run payroll in New Jersey?
At least twice a month for hourly employees (per NJ labor rules).
3. What forms are required for new hires?
Federal W-4 and state NJ-W4.
4. What’s the SUTA wage base for 2025?
$43,100 for most employers.
5. Do I need to file payroll if I have only one employee?
Yes — any business paying $1,000 or more in a calendar year must register and withhold state taxes.
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.