Understanding Your New Jersey Paycheck in 2025
If you live or work in the Garden State, understanding your New Jersey paycheck is crucial for financial planning. Unlike states with a flat tax, New Jersey employs a progressive income tax system with rates ranging from 1.4% to 10.75%. But income tax is just one piece of the puzzle.
For the 2025 tax year, there are significant changes to payroll taxes that will directly affect your take-home pay. Most notably, the State Disability Insurance (SDI) contribution, which was waived for workers in 2024, has been reinstated. Additionally, the Family Leave Insurance (FLI) rate has increased.
Our New Jersey Paycheck Calculator is updated with the latest 2025 tax brackets and withholding rates to give you an accurate estimate of your net pay. Whether you're starting a new job in Newark, Jersey City, or Trenton, or just curious about how the new rates impact your bottom line, this tool breaks down every deduction.
How to Use This Calculator
Getting an accurate estimate is simple. Follow these steps:
- Enter Gross Pay: Input your earnings before any taxes or deductions. This could be your annual salary or hourly wage multiplied by hours worked.
- Select Frequency: Choose how often you get paid (Weekly, Bi-Weekly, Semi-Monthly, etc.). This ensures the tax brackets are applied correctly to each period.
- Filing Status: Choose your status (Single, Married Filing Jointly, etc.). NJ has specific brackets for each status.
- Enter Exemptions: If you claim dependents or other exemptions on your NJ-W4, enter the number here. Each dependent reduces your taxable income by $1,500.
- Calculate: Click the button to see your estimated net pay and a detailed breakdown of taxes.
New Jersey Payroll Taxes: 2025 Updates
New Jersey is one of the few states that requires employees to contribute to state-run disability and family leave programs. These are mandatory deductions from your paycheck. Here is exactly what changed for 2025:
State Disability Insurance (SDI)
Status: Reinstated for 2025
After being 0% in 2024, the worker contribution rate for SDI is back.
- Rate: 0.23%
- Wage Base: $165,400
- Max Deduction: $380.42 per year
Family Leave Insurance (FLI)
Status: Rate Increase
The contribution rate for FLI has increased significantly from 0.09% in 2024.
- Rate: 0.33%
- Wage Base: $165,400
- Max Deduction: $545.82 per year
Unemployment Insurance (UI)
Employees also contribute to the state Unemployment Insurance fund. For 2025, the rate remains steady, but the taxable wage base has adjusted slightly.
- Rate: 0.3825%
- Wage Base: $43,300
- Max Deduction: $165.62 per year
Once your earnings for the year exceed the wage base ($43,300 for UI, $165,400 for SDI/FLI), these deductions will stop for the remainder of the year, giving your paycheck a slight boost.
New Jersey Income Tax Brackets (2025)
New Jersey's income tax is progressive, meaning higher portions of your income are taxed at higher rates. The state has some of the highest top marginal rates in the country, but the lower brackets are relatively modest.
For Single Filers and Married Filing Separately, the 2025 brackets are:
| Taxable Income Over | But Not Over | Tax Rate |
|---|---|---|
| $0 | $20,000 | 1.40% |
| $20,000 | $35,000 | 1.75% |
| $35,000 | $40,000 | 3.50% |
| $40,000 | $75,000 | 5.525% |
| $75,000 | $500,000 | 6.37% |
| $500,000 | $1,000,000 | 8.97% |
| $1,000,000 | And over | 10.75% |
For Married Filing Jointly, Heads of Household, and Surviving Spouses, the brackets are more favorable, with the 1.75% rate extending up to $50,000 and the 3.5% rate starting at $80,000.
Federal Taxes and FICA: The Base of Your Deductions
In addition to New Jersey state taxes, your paycheck is subject to federal deductions. These are consistent across all 50 states and fund the federal government's operations, including national defense, infrastructure, and social programs. Understanding these deductions is key to knowing where your money goes.
Federal Income Tax
This is calculated based on the IRS tax brackets, which are also progressive. Your filing status (Single, Married, etc.) and the information on your W-4 form determine how much is withheld. The more you earn, the higher the percentage of tax you pay on the top portion of your income. It's important to keep your W-4 updated to avoid owing money at tax time or giving the government a large interest-free loan in the form of a refund.
FICA Taxes
FICA stands for the Federal Insurance Contributions Act. It mandates two taxes that you see on every pay stub:
- Social Security: 6.2% of your earnings up to the wage base limit ($168,600 for 2024, adjusted annually). This funds retirement and disability benefits for millions of Americans.
- Medicare: 1.45% of all earnings, with no limit. High earners (over $200,000 for singles, $250,000 for couples) pay an Additional Medicare Tax of 0.9%. This funds health insurance for seniors.
New Jersey Reciprocity: Working in PA?
New Jersey has a reciprocal tax agreement with only one state: Pennsylvania. This is a massive benefit for commuters.
If you live in New Jersey but work in Pennsylvania, you do not have to pay Pennsylvania income tax on your wages. Instead, you only pay New Jersey income tax.
How to Claim Exemption
To take advantage of this, you must file Form REV-419 EX (Employee's Nonwithholding Application Certificate) with your Pennsylvania employer. This tells them to stop withholding PA tax and (ideally) withhold NJ tax instead.
Note on New York: New Jersey does NOT have reciprocity with New York. If you live in Jersey City and work in Manhattan, you will pay New York taxes on your wages. However, you can claim a credit on your New Jersey tax return for taxes paid to New York to avoid double taxation. This is known as the "Credit for Taxes Paid to Other Jurisdictions."
How Bonuses are Taxed in New Jersey
Did you get a holiday bonus or a performance incentive? Congratulations! But be prepared for the tax hit. Bonuses are considered "supplemental wages" by the IRS and New Jersey.
- Federal: Employers often use a flat 22% withholding rate for bonuses under $1 million. If your regular tax bracket is lower, you might get some of this back. If it's higher, you might owe more.
- New Jersey: The state does not have a special flat rate for supplemental wages like the federal government. Bonuses are typically added to your regular income and taxed according to the annual payroll period tables. This means a large bonus could temporarily push you into a higher withholding bracket for that pay period.
Who Needs to File a New Jersey Return?
Not everyone has to file. For the 2024/2025 tax year, you generally must file a New Jersey Resident Income Tax Return (Form NJ-1040) if your gross income for the entire year was more than the filing threshold for your status:
| Filing Status | Income Threshold |
|---|---|
| Single / Married Filing Separately | $10,000 |
| Married Filing Jointly / Head of Household | $20,000 |
Even if you earned less, you should file a return if you had New Jersey income tax withheld from your pay so you can get a refund. You may also need to file to claim refundable tax credits like the Earned Income Tax Credit (EITC) or the Child and Dependent Care Credit.
Example Calculation: The Full Picture
Let's look at a comprehensive example. Sarah is a single filer living in Hoboken, NJ. She earns an annual salary of $75,000 and is paid bi-weekly (26 pay periods). She contributes 5% to her 401(k).
Paycheck Breakdown
Gross Pay
$2,884.62
401(k) Contribution (5%)
-$144.23
Reduces Taxable Income
- Federal Tax (Est): -$265.00
- Social Security (6.2%): -$178.85
- Medicare (1.45%): -$41.83
- NJ State Tax (Est): -$98.50
- NJ SDI (0.23%): -$6.63
- NJ FLI (0.33%): -$9.52
- NJ UI (0.3825%): -$11.03
- Net Pay: $2,129.01
*Note: 401(k) contributions reduce your federal and state taxable wage base, lowering your income tax liability immediately.
Frequently Asked Questions
How to Increase Your Take-Home Pay
While taxes are mandatory, there are smart ways to optimize your finances:
- Pre-Tax Deductions: Contributing to a 401(k), 403(b), or HSA reduces your taxable income for both federal and NJ state tax purposes (check specific NJ rules for HSA, as they can be complex).
- Review Your W-4: If you consistently get a large refund, you might be withholding too much. Adjusting your allowances can put more money in your paycheck throughout the year.
- Claim Exemptions: Ensure you are claiming all eligible dependents. In NJ, each dependent provides a $1,500 exemption.
If you are considering moving to another state, compare your potential earnings with our other State Paycheck Calculators.
For more details on federal tax planning, visit the IRS website or check the NJ Division of Taxation.