If you manage payroll for your New Jersey business, calculating payroll taxes correctly is essential. Between federal deductions, state income tax, and employer contributions, there’s more to each paycheck than just gross pay.
This guide explains how to calculate payroll taxes in New Jersey step-by-step, with examples and 2025 rates to help you stay compliant and plan your labor costs.
What Are Payroll Taxes in New Jersey?
Payroll taxes are divided into two main groups:
- Employee withholdings — taxes taken from workers’ paychecks (federal, state, and FICA).
- Employer contributions — taxes the employer pays directly (unemployment, disability, and federal unemployment).
Together, these form the full payroll tax cost per employee.
To get quick estimates, use a New Jersey biweekly paycheck calculator — it automatically includes state and federal taxes for 2025.
Step-by-Step: How to Calculate Payroll Taxes in New Jersey
Step 1: Determine Gross Wages
Start by finding the employee’s gross wages before taxes:
- Hourly employees: Hourly rate × hours worked (include overtime at 1.5× the rate).
- Salaried employees: Annual salary ÷ pay periods (weekly, biweekly, or monthly).
- Add any bonuses, tips, or commissions.
Example:
An employee earning $30/hour for 40 hours = $1,200 gross weekly pay.
Step 2: Calculate Employee Withholdings
Employees have these taxes withheld:
- Federal income tax (based on IRS Form W-4)
- FICA taxes:
- 6.2% Social Security up to $168,600
- 1.45% Medicare on all wages (+0.9% for high earners)
- New Jersey state income tax: 1.4% – 10.75% depending on income and filing status
- State Disability (TDI) and Family Leave Insurance (FLI) contributions
You can use the New Jersey paycheck deductions calculator to see exactly how much is withheld each pay period.
Step 3: Add Employer Payroll Contributions
In addition to withholdings, employers must pay:
| Tax Type | Who Pays | Rate / Wage Base (2025) | Purpose |
|---|---|---|---|
| Unemployment Insurance (SUI) | Employer | 0.5% – 5.8% up to $43,300 | State unemployment fund |
| Temporary Disability Insurance (TDI) | Employer + Employee | ~0.1%–0.75% (varies) | Short-term disability coverage |
| Family Leave Insurance (FLI) | Employee | ~0.09% up to $170,000 | Paid family leave |
| Federal Unemployment (FUTA) | Employer | 0.6% on first $7,000 | Federal unemployment fund |
| FICA (Employer Share) | Employer | 7.65% | Social Security + Medicare |
Step 4: Apply Local Payroll Taxes (If Applicable)
Some New Jersey cities impose local payroll taxes:
- Newark: 1% of wages for employees working in the city
- Jersey City: 1% of wages for non-resident employees
If your business operates in these areas, apply the additional 1% tax to each applicable employee’s gross pay.
Step 5: Example Payroll Tax Calculation
Let’s calculate payroll taxes for a biweekly employee earning $2,000:
| Tax Type | Rate / Amount | Who Pays | Cost / Deduction |
|---|---|---|---|
| Federal Income Tax | ~12% | Employee | $240 |
| FICA (Social Security + Medicare) | 7.65% | Both | $153 (each) |
| NJ State Income Tax | 3.5% | Employee | $70 |
| TDI + FLI | 0.5% | Employee | $10 |
| SUI (1.5%) | Employer | $30 | |
| Local Tax (Newark 1%) | Employer | $20 | |
| Total Employer Payroll Cost | $2,203 | ||
| Employee Take-Home Pay | ≈ $1,530 |
Step 6: File and Pay Payroll Taxes
Employers must:
- Register with the NJ Division of Taxation and Department of Labor.
- File Form NJ-927 (quarterly tax return) and Form WR-30 (employee wage report).
- Remit state withholding and employer contributions electronically.
Deadlines vary by liability size — large employers often deposit weekly, while smaller ones file quarterly.
Tips for Accurate Payroll Tax Calculation
- Verify current 2025 wage bases every January — SUI and TDI rates change annually.
- Double-check if employees work in multiple states — remote or hybrid work may change tax jurisdiction.
- Use automated tools like a New Jersey gross-to-net calculator to simplify compliance.
- Keep all wage and withholding records for at least four years.
Common Questions About Payroll Taxes in New Jersey
1. What payroll taxes do New Jersey employers pay?
Employers pay unemployment (SUI), TDI, FUTA, and FICA employer share.
2. How do I calculate NJ state income tax withholding?
Use the NJ-WT withholding tables or an online calculator that factors in allowances and pay frequency.
3. What’s the 2025 wage base for SUI?
$43,300 — the maximum amount per employee subject to state unemployment tax.
4. Are there local payroll taxes in NJ?
Yes — Newark and Jersey City apply a 1% employer payroll tax.
5. How often do employers file NJ payroll taxes?
Quarterly filings are standard, but high-volume employers may remit weekly.
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.