Income tax withholding
| Imposes wage income tax | Yes |
|---|---|
| Rate structure | Graduated, top marginal rate 10.75% |
| Withholding certificate | NJ-W4 Employee's Withholding Allowance Certificate |
| Accepts federal Form W-4 | No |
| Convenience-of-the-employer rule | Yes Remote days worked outside New Jersey for a New Jersey employer can still be sourced to New Jersey unless the arrangement is an employer necessity. |
| Nonresident withholding threshold | From the first dollar Withholding required from the first dollar of New Jersey-source wages. New Jersey applies a RETALIATORY convenience-of-the-employer rule (P.L.2023 c.125, enacted 7/21/2023, retroactive to 1/1/2023): it sources a nonresident's remote workdays to New Jersey only where the nonresident's HOME state imposes its own convenience rule -- currently Delaware, Nebraska and New York residents. It does NOT apply to Pennsylvania residents (reciprocity) or to Connecticut residents. |
| Local income taxes | Yes 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. |
Reciprocity
New Jersey exempts residents of 1 state from New Jersey withholding, provided the employee files NJ-165 with the employer.
The PA/NJ Reciprocal Income Tax Agreement is LIVE -- New Jersey's 2016 attempt to terminate it was rescinded and the agreement remains in force. A Pennsylvania resident working in New Jersey files Form NJ-165 with the NJ employer; a New Jersey resident working in Pennsylvania files Form REV-419 with the PA employer. Covers compensation only. IMPORTANT: the agreement does NOT cover the Philadelphia Wage Tax -- New Jersey residents working in Philadelphia are still subject to it (with a NJ credit available).
States that exempt New Jersey residents
A New Jersey resident working in these states files that state's certificate and is taxed only by New Jersey.
Unemployment insurance and paid leave
| Taxable wage base 2026 | $44,800 2025 base was $43,300. |
|---|---|
| New employer rate | 2.6825% New Jersey employer UI rates run on a July 1-June 30 fiscal year. The new-employer UI rate is 2.8% for FY 2025-26 and 2.6825% for FY July 1, 2026 - June 30, 2027 (the figure shown). Employees also pay UI/workforce and disability/family leave contributions. |
| Experience rate range | 0.5% – 5.8% |
| Experience-rating method | reserve ratio |
| Employee UI contribution | Yes 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. |
| Paid family / medical leave | Yes 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. |
Employer registration
- Tax agency
- New Jersey Division of Taxation
- UI agency
- New Jersey Department of Labor and Workforce Development
Sources
nj.gov · nj.gov · nj.gov · oui.doleta.gov · oui.doleta.gov · oui.doleta.gov · nj.gov · nj.gov