New Jersey

The Facts on New Jersey's Tax Climate

Here are some basic facts on New Jersey's tax system and how it compares to other states:

Tax Freedom Day Arrives on April 29 in New Jersey
Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2011, New Jersey taxpayers work until April 29 to pay their total tax bill, ranking them 2nd highest in the nation. This is 17 days later than national Tax Freedom Day (April 12). The Tax Freedom Days of the neighboring states are: New York, April 24 (ranked 3rd nationally), Pennsylvania, April 14 (ranked 13th nationally), and Delaware, April 10 (ranked 21st nationally).
Full study of Tax Freedom Day, nationwide and in each state

New Jersey's State and Local Tax Burden Highest in Nation
New Jersey's and local tax burden percentage has consistently ranked among the nation's highest, this year being no exception, taking the top stop, currently estimated at 12.2% of income (1st nationally), above the current national average of 9.8%. Compared to the 1977 data, New Jersey had a rate of 12.4% (3rd nationally), decreasing 0.2% overall. Currently residents pay $6,751 per capita in state and local taxes.
New Jersey's State-Local Tax Burden, 1977-Present
Other States' State/Local Tax Burdens
Map of U.S. Showing all State's Burdens and Ranks
Historical Chart Comparing All States' State/Local Tax Burdens from 1977 to 2009

New Jersey's 2012 Business Tax Climate Ranks Last
New Jersey ranks last in the Tax Foundation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. Neighboring states rank as follows: New York (49th), Pennsylvania (19th) and Delaware (12th).
50-State Comparison of Business Tax Climates (data only)
2012 State Business Tax Climate Index, Ninth Edition (full study)

New Jersey's Individual Income Tax System
New Jersey's personal income tax system consists of six brackets and a top rate of 8.97% kicking in at an income level of $500,000. Among states levying personal income taxes, New Jersey's top rate ranks 6th highest nationally. New Jersey's 2008 state-level individual income tax collections were $1,457 per person, which ranked 6th highest nationally.
50-State Table of Individual Income Tax Rates
50-State Table of State Individual Income Tax Collections
50-State Table of State and Local Individual Income Tax Collections Per Capita

New Jersey's Corporate Income Tax System
New Jersey's corporate tax structure consists of a flat 9% on corporate income. However, corporations with total net income of $100,000 or less pay 7.5% and corporations with total net income of $50,000 or under pay 6.5%. Among states levying corporate income taxes, New Jersey's top tax rate ranks 5th highest nationally. In 2008, state-level corporate tax collections (excluding local taxes) were $326 per capita, ranking the state 5th highest nationally.
50-State Table of Corporate Income Tax Rates, 2000-2009
50-State Table of State and Local Corporate Income Tax Collections Per Capita and Per Household, 2005
50-State Table of State Corporate Income Tax Collections Per Capita, 2006

New Jersey Sales and Excise Taxes
New Jersey levies a 7% general sales or use tax on consumers, which is above the national median of 5.85%. In 2007 combined state and local general and selective sales tax collections were $1,424 per person, ranking 22nd highest nationally. New Jersey's gasoline tax stands at 14.5 cents per gallon and ranks 47th highest nationally. New Jersey's cigarette tax stands at $2.70 per pack of twenty, which is the 5th highest cigarette tax in the nation. The sales tax was adopted in 1966, the gasoline tax in 1927 and the cigarette tax in 1948.
50-state table of sales, cigarette, gas, beer, wine, and spirits tax rates.
50-State Table of State and Local General and Selective Sales Tax Collections Per Capita

New Jersey Property Taxes: Highest Per Capita in the Nation
New Jersey is one of the 37 states that collect property taxes at both the state and local levels. As in most states, local governments collect far more. New Jersey's localities collected $2,372.03 per capita in property taxes in fiscal year 2006, which is the latest year the Census Bureau published state-by-state property tax collections. At the state level, New Jersey collected $0.40 in property taxes during FY 2006, making its combined state/local property taxes $2,372.43 per capita, New Jersey's combined per capita collections were the highest in the nation.
State property tax collections per capita by state

Federal Tax Burdens and Expenditures: New Jersey is a Donor State
New Jersey taxpayers receive less federal funding per dollar of federal taxes paid than any other state. Per dollar of federal tax paid in 2005, New Jersey citizens received approximately $0.61 in the way of federal spending. This represents a decline from 1995 when New Jersey received $0.68 per dollar of taxes in federal spending (second lowest). Neighboring states and the amount of federal spending they received per dollar of federal taxation paid were as follows: New York ($0.79), Pennsylvania ($1.07), and Delaware ($0.77).
Comparing the amount of federal taxes sent to Washington with the amount of federal spending coming back to the state

Related Blog Entries