Income tax withheld to
New Jersey
Graduated, top rate 10.75%
Determination engine
Which state do you actually withhold in?
Reciprocity, convenience-of-the-employer, nonresident thresholds and unemployment localization, applied together to one employee's facts. Every answer cites the state source it came from.
Withhold New Jersey income tax.
New York residents get no exemption from New Jersey tax, so the work state governs.
Employee certificate
NJ-W4
Employee's Withholding Allowance Certificate
Unemployment insurance
New Jersey
Localized under factor 1: Localization.
Reciprocal agreement
No
New Jersey has agreements, but not with New York.
→
Withhold New Jersey nonresident income tax
New Jersey taxes wages earned inside the state by nonresidents, and no reciprocal agreement covers New York residents. New Jersey requires withholding from the first dollar of in-state wages.
!
New York also taxes this income, with a credit
The residence state taxes worldwide income. The employee claims a credit on the New York return for tax paid to New Jersey, which prevents true double taxation but usually still leaves a balance if New York's rate is higher. Some employers withhold for both states; many withhold only for New Jersey and let the employee manage the difference.
!
New Jersey has local income taxes
Newark imposes a 1% payroll tax, but it is an EMPLOYER-paid tax on wages, not withheld from employees. New Jersey also has substantial employee-paid state programs withheld through payroll: Unemployment Insurance, Workforce Development, Temporary Disability Insurance and Family Leave Insurance.
!
New York has local income taxes at the residence
New York City imposes a resident personal income tax and Yonkers imposes a resident income tax surcharge plus a nonresident earnings tax -- all withheld through payroll (see Form IT-2104.1 for nonresident allocation). The Metropolitan Commuter Transportation Mobility Tax (MCTMT) is an employer-paid tax on payroll in the MTA region, not withheld from employees.
→
New Jersey paid family and medical leave contributions
New Jersey runs two employee-funded programs: Temporary Disability Insurance at 0.19% and Family Leave Insurance at 0.23% for 2026 (0.42% combined), on employee wages up to $171,100. Employers also pay a TDI contribution (0.10%-0.75% on the $44,800 employer base); employers do not contribute to FLI. Employee contribution: 0.42%. These follow the state of unemployment coverage, not the income tax state.
!
New York also runs a paid leave program
The employee resides in New York, which has a mandatory paid leave program, but unemployment coverage is localized to New Jersey. Check whether New York requires coverage based on residence; several programs use a work-location test and a few do not.
→
New Jersey withholds an employee unemployment contribution
New Jersey withholds employee UI-related contributions for calendar year 2026: 0.3825% for UI plus 0.0425% for the Workforce Development/Supplemental Workforce Funds = 0.425% total, on wages up to $44,800. Employees separately pay 0.19% for Temporary Disability and 0.23% for Family Leave Insurance on wages up to $171,100.
→
Employer registrations you will need
- New Jersey — Income tax withholding: New Jersey Division of Taxation
- New Jersey — Unemployment insurance: New Jersey Department of Labor and Workforce Development
→
Get the form
NJ-W4 — New Jersey (official state source)
Advertisement
Change the inputs
Advertisement
This is a determination aid, not advice.
StateSide encodes published state rules and applies them mechanically to the facts you enter. It does not know your
entity structure, your nexus history, your equity compensation, or the dozens of exceptions that turn a clean rule into
a judgement call. Every determination cites the state source it came from — verify against that source, and take
anything consequential to a payroll tax professional before you act on it.