What is the New Jersey withholding rate for paychecks?

Navigating your paycheck can be confusing, but understanding your New Jersey withholding rate is crucial for managing your personal finances. Unlike a fixed rate, New Jersey uses a progressive income tax system, meaning the amount of state tax withheld from your paycheck is not a flat percentage. It changes based on your income level and filing status.

This guide is for anyone who lives or works in New Jersey and wants to understand how to calculate their withholding tax, verify their paycheck, or determine the right number of allowances to claim on their Form NJ-W4.

What Is the New Jersey Withholding Rate?

The New Jersey withholding rate is a progressive tax that ranges from 1.5% to 11.8%. The specific rate applied to your income depends on which tax bracket you fall into. Your employer uses official state withholding tables to calculate this amount based on:

• Your Gross Income: Your total earnings before any deductions.
• Your Filing Status: Single, Married Filing Jointly, Head of Household, etc.
• Your Number of Allowances: The number of exemptions you claim on your Form NJ-W4.

The more allowances you claim, the less tax is withheld from each paycheck, which can lead to a larger tax bill at the end of the year if you under-withhold.

New Jersey Income Tax Brackets (2025)

Here’s a breakdown of the 2025 tax brackets for two common filing statuses.

Single Filers & Married Filing Separately

• 1.5% on income up to $20,000
• 2.0% on income from $20,001 to $35,000
• 3.9% on income from $35,001 to $40,000
• 6.1% on income from $40,001 to $75,000
• 7.0% on income from $75,001 to $500,000
• 9.9% on income from $500,001 to $1,000,000
• 11.8% on income over $1,000,000

Married Filing Jointly & Head of Household

• 1.5% on income up to $20,000
• 2.0% on income from $20,001 to $50,000
• 2.7% on income from $50,001 to $70,000
• 3.9% on income from $70,001 to $80,000
• 6.1% on income from $80,001 to $150,000
• 7.0% on income from $150,001 to $500,000
• 9.9% on income from $500,001 to $1,000,000
• 11.8% on income over $1,000,000

Real-Life Examples

Let’s look at how this plays out on a paycheck.

Example 1: Single Filer

Scenario: A single employee earns a bi-weekly paycheck of $1,800. Their annual salary is $46,800, placing them in the 6.1% bracket.

Withholding Calculation: Their employer uses the official New Jersey withholding tables. The tax isn’t a simple 6.1% of $1,800. Instead, a portion is taxed at 1.5%, another at 2.0%, and so on, with only the highest portion of their income being taxed at the 6.1% rate. The employer will withhold approximately $120 in state income tax per paycheck.

Example 2: Married Filing Jointly

Scenario: A married employee earns a bi-weekly paycheck of $2,700. Their combined annual household income is $70,200, placing them in the 3.9% bracket.

Withholding Calculation: Using the tables for a “Married Filing Jointly” status, the employer withholds an amount that accounts for the lower brackets first. The estimated withholding would be around $85 in state income tax per paycheck.

Key Takeaway: Your withholding is not a flat rate. It’s a calculated amount based on progressive brackets and the information on your W-4 form.

How Other Deductions Affect Your Paycheck

In New Jersey, your paycheck also has other state-level deductions. These are separate from income tax and include contributions to programs like:

• Unemployment Insurance (UI): Helps provide benefits for those who have lost their jobs.
• Disability Insurance (DI): Provides benefits for non-work-related illnesses or injuries.
• Family Leave Insurance (FLI): Helps fund paid time off for family caregiving.
• Workforce Development: Supports job training programs.

These deductions are often a small percentage of your income up to a specific wage base. Always check your pay stub to see a full breakdown of all deductions, including federal taxes like Social Security and Medicare.

Frequently Asked Questions (FAQ)

Q: What is the main difference between New Jersey’s income tax and a flat tax?

A: New Jersey uses a progressive tax system, which means higher earners pay a larger percentage of their income in taxes. A flat tax would apply the same single percentage to everyone, regardless of their income level.

Q: How do I know if I’m withholding the right amount?

A: You can use an online paycheck calculator or review your year-end tax liability from previous years. If you consistently owe a lot of money or get a very large refund, you may need to adjust the allowances on your Form NJ-W4.

Q: Can I change my withholding during the year?

A: Yes. You can submit a new Form NJ-W4 to your employer at any time. This is recommended after significant life changes like a new job, marriage, or having a child.

Q: Why do my federal and state withholding rates seem different?

A: Federal and state taxes are calculated using entirely different systems and brackets. Federal income tax also has a progressive structure, but the rates and rules are unique and distinct from New Jersey’s.

Q: Does New Jersey have a standard deduction?

A: No, New Jersey does not have a standard deduction. However, it does allow for a personal exemption of $1,000 per person.