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Gross Income Tax
Overview

Description
This graduated tax is levied on gross income earned or received after June 30, 1976, by New Jersey resident and nonresident individuals, estates, and trusts.

Rate
Rates for tax years beginning on or after January 1, 2004, range from 1.4% 8.97%.

Filing Threshold
For tax years beginning before January 1, 1994, filers with incomes of $3,000 or less for the entire year ($1,500 or less for married persons filing separately) pay no tax. For the 1994 to 1998 tax years, filers with incomes of $7,500 or less for the entire year ($3,750 or less for married persons filing separately) pay no tax. The income levels were raised for the 1999 tax year as part of a three-year phase-in of higher filing thresholds, and filers with incomes of $10,000 or less for the entire year ($5,000 or less for married persons filing separately) pay no tax. For tax year 2000, the filing threshold was $10,000 or less for the entire year (single filers and estates and trusts), $15,000 or less for the entire year (married couples filing jointly, heads of household, and surviving spouses), and $7,500 or less for the entire year (married persons filing separately). For tax year 2001 and thereafter, the filing threshold is $10,000 or less for the entire year (single filers, married persons filing separately, and estates and trusts), and $20,000 or less for the entire year (married couples filing jointly, heads of household, and surviving spouses).

Effective for tax years beginning on or after January 1, 2007, any reference to a spouse also refers to a partner to a civil union recognized under New Jersey law.

Exemptions
  • Taxpayer, $1,000.
  • Taxpayer’s spouse/civil union partner or domestic partner who does not file separately, $1,000.
  • Taxpayer 65 years old or more, additional $1,000; same for spouse/civil union partner age 65 or older who does not file separately.
  • Blind or totally disabled taxpayer, additional $1,000; same for blind or totally disabled spouse/civil union partner who does not file separately.
  • Taxpayer’s dependent, $1,500.
  • Taxpayer’s dependent under age 22 and attending college full time, additional $1,000.

Deductions

  • Payments of alimony or for separate maintenance are deductible by the payer if reported as income by the payee.
  • Unreimbursed medical expenses in excess of 2% of gross income; qualified medical savings account contributions; and for the “self-employed,” qualified health insurance costs.
  • Property tax deduction (or credit).
  • Qualified conservation contribution.
  • Deduction for eligible taxpayers who provide primary care medical and/or dental services at a qualified practice located in or within five miles of a Health Enterprise Zone.
Credits
  • Payments of income or wage tax imposed by another state (or political subdivision) or by the District of Columbia, with respect to income subject to tax under this Act. This shall not exceed the proportion of tax otherwise due that the amount of the taxpayer’s income subject to tax by the other jurisdiction bears to the taxpayer’s entire New Jersey income.
  • Amounts withheld by an employer and payments of estimated tax, including any payments made in connection with the sale or transfer of real property by a nonresident, estate, or trust.
  • Amounts paid by an S corporation on behalf of a shareholder.
  • Amounts paid by a partnership on behalf of a partner.
  • New Jersey Earned Income Tax Credit.
  • Excess unemployment and disability insurance contributions withheld.
  • Property tax credit (or deduction).
  • Sheltered Workshop Tax Credit.

Withholding Requirement
All employers and others who withhold New Jersey income tax are required to file quarterly returns of tax withheld and to remit tax on a monthly, quarterly, or weekly basis.

Those with prior year withholdings of $10,000 or more are required to remit the income tax withheld by means of Electronic Funds Transfer (EFT) on or before the Wednesday of the week following the week containing the payday(s) on which taxes were withheld.

Effective for wages paid on and after January 1, 2000, certain employers of household workers may report and remit Gross Income Tax withheld on an annual basis.

Disposition of Revenues
Revenues are deposited in the Property Tax Relief Fund to be used for the purpose of reducing or offsetting property taxes.


Last Updated: Monday, 09/27/10



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