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Updated: May 22, 2023
Out of all the states in the US, New Jersey has the highest population density, highest percent urban population, and the densest system of railroads and highways. In the world, New Jersey has the most diners, the most shopping malls in one area, the largest seaport, the longest boardwalk, and the tallest water tower. So for a little guy, New Jersey has a lot going on. The same goes for New Jersey payroll taxes. All the local taxes, withholding requirements, and insurance taxes can get beyond confusing. Fortunately, our New Jersey payroll calculator can simplify the process so you can focus on making your small business the next big thing New Jersey has to offer.
Before you can start thinking about New Jersey payroll taxes, you need to first calculate federal payroll taxes. Below is a summary of the steps you need to take in order to run federal payroll, but if you would like to get into the nitty-gritty, check out our step-by-step guide.
New Jersey has a progressive income tax policy with rates that go all the way up to 10.75% for gross income over $5 million. Tax brackets vary based on filing status and income.
Local Taxes: For most of the Garden State, there are no local income taxes. However, Newark residents and any non-residents who work in Newark have to pay an additional city tax of 1%.
Unemployment Insurance (UI): In New Jersey, unemployment taxes are a team effort. Both employers and employees contribute. Rates range from 0.6% to 6.4% on the first $41,400 for 2023. If you’re a new employer, you’ll pay a flat rate of 2.8%.
Disability Insurance (DI): New employers pay 0.5%. Employees pay 0.47%. All other businesses are taxed based on employment experience.
Family Leave Insurance (FLI): New Jersey is a family-oriented state, granting insurance if you are bonding with a new baby (biological or adopted) or caring for a sick family member. Employees are responsible for paying this 0.28% tax.
NJ Workforce Development Partnership Fund: 0.0425% for employees and 0.1175% for new employers.
Here are all the details if you want to look further.
Keep in mind: There are some states with reciprocal tax agreements in place, and New Jersey currently has one with the neighboring state of Pennsylvania. What does this mean? Let’s say that you have an employee who lives in Pennsylvania, but travels to New Jersey to work for your company. In this situation, your employee may want state taxes withheld for their home state instead of where your business is located. To set this up, the employee must fill out Form NJ 165 and give it to you.
Did you know?
For existing employers (as well as those looking to launch a business), New Jersey provides a special tax information packet to help them understand their tax obligations and avoid missteps. If you want to learn more, here are two options:
In case that wasn’t enough, here are some more resources for you to learn more about New Jersey payroll taxes:
Register as an employer with the Department of the Treasury | (609) 292-9292
Employer Withholding Information from the Division of Taxation.
New Jersey Income Tax Withholding Instructions | (609) 984-1721
Go be the next big, or small, thing. If anything, New Jersey has proven that sometimes the smallest things make the biggest impact. So go write those paychecks and make the impact your small business, whatever it is, was meant to make.
Make sure to send in your federal tax filings every quarter by filling out Form 941. You also need to file Form 940 to report your FUTA taxes annually. Learn more about IRS tax due dates here.
You can also make deposits on an ongoing basis through the EFTPS payment system.
The calculator at the top of this page makes it simple for New Jersey employers to quickly process their employees’ gross pay, net pay, and deductions (so you can cut paychecks with confidence). But occasionally, employers have situations that require a little more number crunching. For example, if you reward employees with bonuses, Uncle Sam considers them supplemental wages and requires taxes to be withheld. Moreover, if an employee leaves for another job, you may need to figure out what their final paycheck will be. So, if you can use a little more help adding up the numbers, check out some of the calculators listed below.
Try OnPay out yourself to see how easy payroll and HR can be. To get started, just share a few basic details about your business. Our team of pros will set everything up and import your employees’ information for you.