State Taxes on Social Security: Benefits are not taxed.
Sales Tax: State levy is 7%. A reduced rate of 3.5% is charged on in-person sales in designated Urban Enterprise Zones, located in disadvantaged areas. Salem County, which borders no-tax Delaware, also charges the reduced 3.5% rate. Notably, motor vehicles, alcohol and cigarettes are charged at the regular rate in these locations. Most clothing and footwear are tax-exempt across the state.
Income Tax Range: Low: 1.4% (on up to $20,000 of taxable income). High: 8.97% (on taxable income over $500,000). New Jersey allows localities to impose an income tax; the average levy is 0.5%, per the Tax Foundation. Effective income tax rate: 2.1%/individual, 3.6/joint.
Property Taxes: The median property tax on New Jersey’s median home value of $313,200 is $7,452.
Inheritance and Estate Taxes: New Jersey imposes an inheritance tax, at graduated rates ranging from 11% to 16%, on the transfer from a decedent to certain beneficiaries of real and personal property that has a total value of $500 or more. No tax is imposed on transfers to parents, grandparents, descendants, children and their descendants, spouses, civil union partners, domestic partners or charities. There is a $25,000 exemption per Class C beneficiary (siblings, sons-in-law and daughters-in-law). New Jersey’s estate tax, levied on estates that exceed $2 million not passing to a spouse or civil union partner, will end Dec. 31, 2017.
An estate may be subject to the New Jersey estate tax even if there is no New Jersey inheritance tax due. However, any inheritance tax due is taken as a credit against any estate tax.
For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in New Jersey.
