Tool | October 2016

State-by-State Guide to Taxes

Compare state tax rates and rules -- on income, ordinary purchases, gas, "sin" products, property, and more -- across the U.S.

New Jersey

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The Bottom Line
Map of New Jersey

Least Tax-Friendly

While New Jersey gives residents a break on income taxes (the top rate of 8.97% only hits a very high bracket), it brings the hammer down when they buy a home. New Jersey’s property taxes are the highest in the U.S., according to the Tax Foundation. Fuel taxes, once a bright spot in New Jersey's picture, were recently raised 23 cents per gallon and are now near the top for the country. New Jersey is one of Kiplinger's top ten least tax-friendly states.

Sales Tax

State levy is 7%. A reduced rate of 3.5% is charged on in-person sales in designated Urban Enterprise Zones, located in disadvantaged areas. Salem County, which borders no-tax Delaware, also charges the reduced 3.5% rate. Notably, motor vehicles are charged at the regular rate in these locations. Most clothing and footwear are tax-exempt.

Income Tax Range

Low: 1.4% (on up to $20,000 of taxable income)

High: 8.97% (on taxable income over $500,000). New Jersey allows localities to impose an income tax; the average levy is 0.5%, per the Tax Foundation.

See Kiplinger.com’s Retiree Tax Map to learn how New Jersey taxes Social Security income and other forms of retirement income.

Motor Fuel Taxes

Gasoline: $0.38 per gallon.
Diesel: $0.42 per gallon.

Property Taxes

The median property tax on New Jersey's median home value of $313,200 is $7,452.

See Kiplinger.com’s Retiree Tax Map for details on tax breaks for seniors in New Jersey.

Vehicle Taxes

Sales tax is due on purchases.

Sin Taxes

Beer: $0.12 per gallon
Hard cider: $0.15 per gallon
Wine: $0.88 per gallon
Liquor: $5.50 per gallon

Cigarettes: $2.70 per pack
Moist snuff: $0.75 per ounce
Other tobacco products: 30% of the wholesale price

Travel Taxes

Hotel: Lodging tax of 5%. Lower rates are charged in Newark, Jersey City, Atlantic City, Wildwood, Wildwood Crest and North Wildwood, which have their own lodging taxes. Sales tax is also levied.

Rental cars: The state charges a flat $5 per day "domestic security fee." Municipalities can add another 5% tax. taxes (Newark adds 5%). Sales tax is also due.

Taxes On Wireless Service

8.9%

Inheritance and Estate Taxes

New Jersey imposes an inheritance tax, at graduated rates ranging from 11% to 16%, on the transfer from a decedent to certain beneficiaries of real and personal property that has a total value of $500 or more. No tax is imposed on transfers to parents, grandparents, descendants, children and their descendants, spouses, civil union partners, domestic partners or charities. There is a $25,000 exemption per Class C beneficiary (siblings, sons-in-law and daughters-in-law).

New Jersey also imposes a separate estate tax on estates that exceed $675,000 not passing to a spouse or civil union partner. The threshold will rise to $2 million on Jan. 1, 2017 and the tax will disappear completely in 2018. The maximum estate tax rate is 16%. An estate may be subject to the New Jersey estate tax even if there is no New Jersey inheritance tax due. However, any inheritance tax due is taken as a credit against any estate tax.

Oddball Tax

Want to own a plush or fuel-thirsty ride? That’ll cost you extra in the Garden State. A 0.4% surcharge is levied on cars that cost more than $45,000 or have an cobined EPA fuel-mileage average of 19 or below.

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