Tool | August 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. Low taxes at the pump (even though it's full-serve) can’t make up for that. 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: $0.15 per gallon.
Diesel: $0.16 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 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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