New Jersey State Taxes: What You’ll Owe in the 2026 Tax Season

• Income tax: Graduated based on income, ranging from 1.4 percent to 10.75 percent.
• Property tax: The statewide average was 1.88 percent of assessed value, according to the latest data from the Tax Foundation. Actual rates vary by county.
• Sales tax: New Jersey has a combined state and local average sales tax of 6.6 percent, according to 2026 data from the Tax Foundation.

How is income taxed?

New Jersey has a graduated income tax with several tiers that range from 1.4 percent for those with taxable income of $20,000 or less to 10.75 percent for those with taxable income above $1 million. Single residents with total gross income of $10,000 or less and residents who are married and filing jointly with total gross income of $20,000 or less do not have to file income taxes.

Residents with income less than $100,000 may use tax tables found here or the tax rate schedules listed below to find out what they owe. For residents with income of $100,000 or more, the state suggests using the tax rate schedules below.

What about investment income?

Most investment income ­— including interest, dividends and capital gains — is taxable as income and subject to tiered brackets. Investment income that is exempt includes interest and gains from debt obligations of the federal government (including U.S. savings bonds and Treasury bills) and distributions from mutual funds on interest earned from federal debt. More information on exemptions is available here.

Are Social Security benefits taxed?

New Jersey does not tax Social Security benefits.

How is property taxed?

The statewide average was 1.88 percent of assessed value, although actual rates vary by county. Property taxes ranged from 0.93 percent in Cape May County to 2.47 percent in Camden County, according to the latest data from the Tax Foundation. The lowest median property taxes paid was $5,052 in Cumberland County. Eight counties had median property taxes paid of more than $10,000: Passaic, Union, Essex, Hunterdon, Somerset, Morris, Monmouth and Bergen.

What about sales and other taxes?

• Sales tax: New Jersey’s statewide sales tax rate is 6.625 percent. While some municipalities impose their own additional sales tax, other municipalities are in “urban enterprise zones,” where qualified sellers collect sales tax at half the statewide rate — bringing it down to approximately 3.3 percent in these areas. As a result, the average local sales tax in New Jersey is -0.02 percent, decreasing the combined state and local average sales tax to 6.6 percent. Exemptions include most groceries, most clothing and footwear, disposable paper products for household use, and prescription and over-the-counter medications.
• Gas and diesel: Gasoline is taxed at 49.1 cents per gallon, while diesel is taxed at 56.1 cents per gallon.
• Vehicle tax: Vehicle purchases are subject to the state’s 6.625 sales tax. In addition, the state charges a one-time 0.4 percent fee on purchases of new passenger automobiles that cost $45,000 or more. The fee also applies for vehicles with a fuel efficiency of less than 19 miles per gallon. More information is available here.
• Alcohol: Alcohol is subject to New Jersey’s 6.625 sales tax.
• Lottery: Lottery winnings of $10,000 or more are subject to the state’s income tax.

Will my heirs or estate have to pay inheritance and estate taxes?

New Jersey has an inheritance tax that ranges from zero to 16 percent and is calculated based on several factors:

• Who the beneficiaries are and how they are related to the deceased
• The value of the assets (and debts) owned by the deceased at the date of death
• What kind of assets the deceased owned
• Whether the deceased lived in New Jersey

For beneficiaries who are a sibling of the deceased, son- or daughter-in-law, or civil union partner of a child of the deceased, the inheritance tax applies as follows:

However, if the recipient of the inheritance has one of the following, they are exempt from the tax:

• Spouse
• Civil union partner after Feb. 19, 2007
• Domestic partner after July 10, 2004
• Child (includes legally adopted child)
• Grandchild, great-grandchild, etc.
• Parents, grandparents, etc.
• Mutually acknowledged child
• Stepchild (but not step-grandchildren or their descendants)

More information is available here.

New Jersey no longer has an estate tax.

Are there any tax breaks for older residents?

• Stay NJ Program: This offers property tax assistance to eligible homeowners age 65 and older. It reimburses them for 50 percent of their property tax bill, up to a maximum bill amount of $13,000. For 2025, the reimbursement amount is capped at $6,500. To be eligible, residents must have owned and lived in a home for the full 12 months of 2025 and have an income below $500,000. The application deadline for 2025 is Nov. 2, 2026. More information is available here.
• Senior Freeze: The Senior Freeze Program reimburses eligible homeowners age 65 and older, as well as people with disabilities, for property tax or mobile-home park-site fee increases on their main residence. To be eligible, residents must have owned and lived in their home since Dec. 31, 2022, or earlier and still owned and lived in the home on Dec. 31, 2025. Total annual income (whether single or filing jointly) must be $172,475 or less. More details are available here.

Are military benefits taxed?

New Jersey does not tax U.S. military pension or survivors’ benefit payments.

What is the deadline for filing taxes in 2026?

The filing deadline for 2025 tax returns is April 15, 2026.

 

More AARP Financial Resources

• AARP Retirement Calculator Determine if you are saving enough to retire when — and how — you want.
• AARP’s Social Security Calculator Figure out when to claim and how to maximize your Social Security benefits.
• AARP Tax Tools Explore resources to help you calculate and prepare taxes.