If you run a business in New Jersey or are managing payroll, understanding what payroll taxes New Jersey employers pay is essential. These taxes fund state programs like unemployment insurance, disability benefits, and workforce development. Accurate compliance ensures your business avoids fines while keeping employees protected.
Key Payroll Taxes for New Jersey Employers
1. State Unemployment Insurance (SUI)
New Jersey employers contribute to SUI, which supports employees who lose their jobs through no fault of their own.
- Taxable Wage Base: $42,300 per employee
- Employer Rates:
- New Employers: 3.10%
- Experienced Employers: 1.20%–7.00%, depending on history
- Employee Contribution: 0.3825%
Example: If an employee earns $40,000, an employer at 3.10% pays $1,240 annually into SUI.
2. Temporary Disability Insurance (TDI)
TDI covers non-work-related injuries or illnesses.
- Employer Contribution: 0% (fully employee-funded)
- Employee Contribution: 0%
- Taxable Wage Base: $161,400
Use Case: An employee taking leave for surgery can receive wage replacement without employer cost.
3. Family Leave Insurance (FLI)
FLI helps employees bond with a newborn or care for a family member.
- Employer Contribution: 0%
- Employee Contribution: 0.0900%
- Taxable Wage Base: $161,400
4. Workforce Development/Supplemental Workforce Fund (WF/SWF)
Supports state workforce programs.
- Employer Contribution: 0.0425%
- Employee Contribution: 0%
- Taxable Wage Base: $42,300
5. New Jersey Income Tax Withholding
Employers must withhold state income tax from wages.
- Withholding Rates: Graduated 1.5%–11.8%
- Responsibility: Accurate calculation, timely submission to NJ Division of Taxation
Real-World Question Answered: “How do I calculate the NJ state tax my employee owes?” Employers use payroll software or NJ state withholding tables.
6. Federal Payroll Taxes
- FUTA (Federal Unemployment Tax Act): 6% on the first $7,000, offset by 5.4% credit for state contributions
- FICA (Social Security & Medicare): 6.2% Social Security + 1.45% Medicare
7. Local Payroll Taxes
Some cities, like Jersey City, require local payroll contributions.
- Rate: 1% of gross payroll
- Exemptions: Wages under $2,500 quarterly, residents, nonprofits, government entities
Practical Example of Combined Payroll Taxes
Scenario: An employer in Jersey City pays an employee $50,000 annually. Approximate contributions:
- SUI (3.10%): $1,550
- WF/SWF (0.0425%): $21.25
- FUTA effective rate: $42
- Local payroll tax (1%): $500
Total Employer Cost: ~$2,113.25
Why Understanding NJ Payroll Taxes Matters
- Avoid penalties and audits
- Ensure employees receive correct benefits
- Budget accurately for payroll expenses
- Stay compliant with state and federal law
Recommended Tool: Payroll software like Gusto or Rippling simplifies calculation and reporting.
Frequently Asked Questions
1. How do I calculate New Jersey employer payroll taxes?
Add applicable taxes including SUI, WF/SWF, FUTA, and local payroll tax. Use NJ wage bases and rates to compute contributions per employee.
2. What is the New Jersey SUI rate for employers?
New employers pay 3.10%. Experienced employers range from 1.20% to 7.00%, based on employment history.
3. Can employees in NJ pay for TDI or FLI?
Yes, Temporary Disability Insurance and Family Leave Insurance are primarily employee-funded. Employers have no contribution for TDI and minimal for FLI.
4. Why do some cities in New Jersey have local payroll taxes?
Cities like Jersey City impose payroll taxes to fund local programs such as public schools. Exemptions exist for small payrolls, residents, nonprofits, and government entities.
5. How does federal payroll tax interact with NJ state taxes?
Employers pay FUTA and FICA on top of NJ SUI and state withholding. Proper calculation ensures no overlap and maximizes credit opportunities.
6. What payroll software helps manage NJ taxes?
Platforms like Gusto, Rippling, and ADP automatically calculate state, federal, and local taxes while keeping records compliant.
7. How often must NJ payroll taxes be reported?
Most taxes, including SUI and state withholding, are reported quarterly. Certain local payroll taxes may have monthly filing requirements.
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.