Employment taxes - New Jersey

Summary of differences between federal and state regulations

Income tax withholding

In New Jersey, the quarterly filing of the employer income tax withholdings and the unemployment/disability insurance (UI/DI) contributions is combined.

As a New Jersey employer, you are required to withhold New Jersey income tax from wages paid to all New Jersey residents unless you are withholding another jurisdiction's income tax at a rate equal to or greater than New Jersey's rate. You must also withhold New Jersey income tax for nonresident employees physically working in this State. Pennsylvania residents are the only out-of-state residents exempt from New Jersey withholdings. As a result of the Reciprocal Income Tax Agreement between New Jersey and Pennsylvania, compensation earned in New Jersey by a Pennsylvania resident is not subject to New Jersey Gross Income Tax. If you employ a Pennsylvania resident in New Jersey, that employee should complete an Employee's Certificate of Non-residence in New Jersey (Form NJ-165) and file it with you. Once an employee has provided you with a completed Certificate of Non-residence you must stop withholding New Jersey income tax.

To determine the amount of New Jersey income tax to be withheld from employees' wages, use the withholding tables or percentage methods contained in the New Jersey Gross Income Tax Instructions for Employers (Form NJ-WT) and Supplemental Withholding Tables (Form NJ-WT Supplemental).

Chapter 210, P.L. 2005 requires all public and private employers to give written notification to potentially eligible employees of the availability of both the federal and New Jersey earned income tax credits when the employer gives the employee the statement of wages and tax withholding (Form W-2) already required under current law. The notification is to be distributed between January 1 and February 15 of each year to coincide with the employer’s distribution of the wage and tax withholding statement.

Unemployment taxes

All states finance UC primarily through contributions from subject employers on the wages of their covered workers. In addition, three states (Alaska, New Jersey, and Pennsylvania) collect contributions from employees. These taxes are deposited by the state to its account in the UTF in the Federal Treasury, and are withdrawn as needed to pay benefits.

Many states have adopted a higher tax base than what is provided in FUTA. Hawaii's wage base is usually higher and changes periodically. In all states, an employer pays a tax on wages paid to each worker within a calendar year up to the amount specified in state law. In addition, most of the states provide an automatic adjustment of the wage base if federal law is amended to apply to a higher wage base than that specified under state law. As a result of the many variables in states taxable wage bases and rates, benefit formulas, and economic conditions, actual tax rates vary greatly among the states and among individual employers within a state.

Wages subject to unemployment tax in this state equal $24,300.

Minimum and maximum rates in this state are 0.3 and 5.4 %. Rates apply to experience rated employers only and do not include applicable surtaxes or penalties.

State

Contacts

Income tax withholding
Department of the Treasury

Unemployment taxes
Department of Labor

Regulations

Income tax withholding
New Jersey Statutes, Title 54 Taxation

Federal

ContactsInternal Revenue Service

Regulations Title 26 Code of Federal Regulations, Internal Revenue