New Jersey state income tax applies to both residents and non-residents who earn income within the state. Here’s what you need to know.
Who has to file a New Jersey tax return?
You must file a New Jersey income tax return if:
- You are a resident of New Jersey and have to file a federal tax return
- You are a non-resident with income from New Jersey sources and made enough to owe New Jersey income tax
- You are a part-year resident and have income from New Jersey sources during the part of the year you were a resident
Does New Jersey tax retirement income?
New Jersey does not exempt any type of retirement income from state income tax. In other words, retirement income is taxable in New Jersey.
This includes Social Security benefits, military retirement pay, pension income, and distributions from 401(k) or IRA accounts.
How much is New Jersey income tax?
New Jersey’s income tax rate ranges from 1.4% to 10.75%, depending on your income level and filing status. The tax rate increases as income levels rise.
When are New Jersey tax returns due?
New Jersey tax returns are due on April 15th, which is the same as the federal tax filing deadline. However, if the 15th falls on a weekend or holiday, the deadline is extended to the next business day.
If you are owed a refund, filing your tax return early can help you get your New Jersey tax refund faster. The state typically processes refunds within four to six weeks of receiving your tax return. However, if you file closer to the deadline, you may experience delays due to the increased volume of returns being processed.
What happens if you don’t file?
If you don’t file your New Jersey tax return by the deadline, you may be subject to penalties and interest. The penalty for failing to file is 5% of the tax owed per month, up to a maximum of 25%. Interest is also charged on any unpaid tax.
Common New Jersey Tax Credits and Deductions
Some common deductions and credits for New Jersey taxes include:
- Earned Income Tax Credit (EITC): New Jersey offers an EITC for low to moderate-income taxpayers. The credit is based on your federal EITC and ranges from 30% to 40% of the federal credit amount.
- Homestead Benefit: This credit provides property tax relief to eligible homeowners and tenants.
- Senior Freeze: This program offers property tax relief to eligible senior citizens and disabled persons.
- Property Tax Deduction: This deduction allows homeowners and tenants who pay property taxes to deduct a portion of their property tax bill from their New Jersey taxable income.
Additionally, New Jersey allows taxpayers to deduct contributions made to the state’s 529 college savings plan from their state taxable income. The state also offers a tax credit for certain charitable contributions made to qualifying organizations.