Official Site of The State of New Jersey

Notice Concerning Estimated Tax for Taxpayers Earning Over $150,000

For tax years beginning on or after January 1, 1999, taxpayers with taxable gross income exceeding $150,000 ($75,000 for married/civil union partner, filing separate) meet the safe harbor exception for the underpayment of estimated tax if the total amount of all payments of estimated tax made on or before the last date prescribed equals 110% of last year’s tax pursuant to N.J.S.A. 54A:9-6(d)(3).

However, the safe harbor of 110% as required under N.J.S.A. 54A:9-6(d)(3) is not reflected in the provisions of N.J.S.A. 54A: 9-6(c) concerning the calculation of estimated tax penalties and interest. N.J.S.A. 54A: 9-6(c) requires that the actual amount of the underpayment is based on the difference between what was actually paid and either 100% of last year’s tax or 80% of the current year’s tax, whichever is smaller.

Therefore, the Division of Taxation will impose estimated tax penalties and interest on an underpayment of estimated tax only on the difference between what was actually paid and either 100% of last year’s tax or 80% of the current year’s tax as expressly authorized under N.J.S.A. 54A:9-6(c).