State-by-State Guide to Taxes on Middle-Class Families
Tool | November 2020

New Jersey State Tax Guide for Middle-Class Families

State tax rates and rules for income, sales, gas, property, cigarette, and other taxes that impact middle-class families.

New Jersey

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The Bottom Line
Flag of New Jersey

Least Tax-Friendly

While New Jersey gives residents a break on income and sales taxes, it brings the hammer down when they buy a home. New Jersey's property taxes are the highest in the U.S. The state-wide average property tax on a $300,000 home in New Jersey comes to a whopping $7,251. Income taxes in New Jersey on middle-class taxpayers are quite low, but the state has a steeply progressive rate structure — and a "millionaire’s tax."

Income Tax Range

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

High: 10.75% (on taxable income over $1 million)

Newark also imposes a payroll tax.

Sales Tax

6.625% state levy. That rate is cut in half (3.3125%) for in-person sales in designated Urban Enterprise Zones located in disadvantaged areas. Salem County, which borders no-tax Delaware, also charges the reduced 3.3125% rate.

Groceries: Exempt
Clothing: Exempt
Motor Vehicles: Taxable (6.625% throughout state)
Prescription Drugs: Exempt

Real Property Taxes

In New Jersey, the median property tax rate is $2,417 per $100,000 of assessed home value.

Motor Fuel Taxes

Gasoline: 50.7¢ per gallon.
Diesel: 57.7¢ per gallon.

Sin Taxes

Cigarettes: $2.70 per pack
Moist snuff: $0.75 per ounce
Other tobacco products: 30% of the wholesale price
Vapor products: $0.10 per ml for closed containers; bulk nicotine liquid is taxed at 10% of retail price

Beer: $0.12 per gallon
Wine: $0.88 per gallon
Liquor: $5.50 per gallon

Marijuana: Sales tax applies to marijuana sales; local taxes of up to 2% may also apply

Annual Car Taxes and Fees

No annual vehicle tax or fee is imposed.

Estate and Inheritance Taxes

New Jersey imposes an inheritance tax on inherited property with a value of $500 or more. No tax is imposed on transfers to the decedent's spouse, domestic partner, parents, grandparents, children and their descendants, or step-children (step-grandchild and their descendants are not exempt). The first $25,000 of property inherited by a decedent's sibling, son-in-law or daughter-in-law is also exempt. After that, they must pay the inheritance tax at rates ranging from 11% to 16%. All other individual heirs pay a 15% tax on the first $700,000 of inherited property and a 16% tax on everything over $700,000.


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