State tax docs / States / New Jersey
New Jersey state income tax: engine rules, 2026
How the QuantCalc engine computes New Jersey tax for tax year 2026, rule by rule, with the official source for each rule. Verification status: Worksheet-tested (what this means).
On this page: How the tax is computed · Rate schedule · Deductions, exemptions and credits · Age 65+ subtractions and credits · Social Security · IRA, 401(k) and private pensions · Public pensions · Military retirement pay · Roth conversions · Capital gains · Worked examples · Not calculated ·
Verification. Machine-readable: this state's entry in the
engine config and the provenance file
(key NJ).
How the tax is computed
Every step the engine takes for New Jersey, in the order it takes them. Steps marked with a filing status or household type apply only there. Each step links the section below that carries New Jersey's figures and the official sources for it; the calculation order page describes every step for all jurisdictions.
What each filing status gets, read back from the engine for a household with $1 of income (so below every phase-out and income test):
| Single | Married filing jointly | Married filing separately | Head of household | |
|---|---|---|---|---|
| Rate schedule used | single schedule | joint schedule | single schedule | head-of-household schedule |
| Top rate | 10.75% from $1,000,000 | 10.75% from $1,000,000 | 10.75% from $1,000,000 | 10.75% from $1,000,000 |
| Standard deduction, under 65 | $1,000 | $2,000 | $1,000 | $1,000 |
| Standard deduction at 70 (joint: both 70) | $1,000 | $2,000 | $1,000 | $1,000 |
| Personal exemption | none | none | none | none |
| Age subtractions at 70 (joint: both 70) | $1,000 | $2,000 | $1,000 | $1,000 |
- Per-person mode joint returns with the spouse's age given On a joint return with the spouse's age given, every age test the state applies per taxpayer is evaluated for each spouse at their own age. Without it one household age applies to both.
engine step (compute_state_tax_detail). Engine convention, no external source: The engine cannot know the second spouse's age unless told. - Rate schedule and standard deduction by filing status Single uses the single schedule and deduction; married filing jointly the joint ones. Head of household and married filing separately follow the two steps below.
New Jersey's values · engine step (select_brackets). Sources (Rate schedule): 2025 Form NJ-1040 Instructions (Tax Rate Schedules, p.63) (checked 2026-09-27) - Married filing separately Where the state publishes its own separate schedule, that one (with half the joint deduction unless a separate deduction is set). Where one schedule applies to every status, that schedule unscaled with the single deduction. Otherwise the joint schedule with every threshold and the deduction halved (computed as the joint tax on twice the income, halved).
New Jersey's values · engine step (select_brackets). Sources (Rate schedule): 2025 Form NJ-1040 Instructions (Tax Rate Schedules, p.63) (checked 2026-09-27) - Head of household The state's head-of-household schedule where it has one, else the single schedule; the head-of-household deduction where set, else the single deduction.
New Jersey's values · engine step (select_brackets). Sources (Rate schedule): 2025 Form NJ-1040 Instructions (Tax Rate Schedules, p.63) (checked 2026-09-27) - The income total every income test uses Other ordinary income + retirement distributions (before any exclusion) + conversion + federally taxable Social Security + long-term gains. It stands in for federal adjusted gross income in every threshold, cliff and phase-out below; state subtractions do not reduce it.
engine step (compute_state_tax_detail). Engine convention, no external source: The inputs are the federal AGI components, so their sum is federal AGI for these income types. - Attributing income to each spouse joint returns with each spouse's own amounts given With a caller's split (the API's
spouseobject), each spouse's own distributions, pension, public pension, conversion, wages and military pay; spouse 2's shares are clamped into the household totals and spouse 1 gets the rest. Without a split, in per-person mode, every item is divided 50/50. Social Security, other ordinary income and gains are always divided 50/50 where a rule needs a per-person amount. The split is used only where a state's rule is per taxpayer; household totals stay authoritative for the base and the income tests.
engine step (compute_state_tax_detail). Engine convention, no external source: Equal attribution is the neutral split when the owner of a dollar is not known. - Keeping the per-spouse shares inside the household joint returns with each spouse's own amounts given After the public-pension and employer-pension carve-outs, if the two spouses' remaining shares add up to more than the household's exclusion-eligible distributions (an inconsistent split), spouse 1's share is reduced so they do not.
engine step (compute_state_tax_detail). Engine convention, no external source: Input normalisation. - Military retirement pay The state's military rule runs first, on military pay alone, per taxpayer: each spouse's own pay at their own age when attributed, otherwise half each at the household age on a joint return. Exempt dollars leave the base; the rest become pension dollars for the general retirement rules.
New Jersey's values · engine step (compute_state_tax_detail). Sources (Military retirement pay): Njit6.shtml (checked 2026-09-27) - One taxpayer's military exemption Exempt: all of it (below the age split, up to the younger cap). Capped: up to the cap for the age tier, plus the earned-income bonus below the age split when the taxpayer's own wages exceed the threshold, less the taxpayer's own Social Security where the rule says so. Percentage: the percentage (below the age split, up to the younger cap). Then the income limit: above it the exemption is lost, or phased out over the range where one is set.
New Jersey's values · engine step (military_exempt_one). Sources (Military retirement pay): Njit6.shtml (checked 2026-09-27) - Social Security exempt None of the federally taxable benefit enters the base.
New Jersey's values · engine step (ss_amount_in_state_base). Sources (Social Security): 2025 Form NJ-1040 Instructions (checked 2026-09-27) - Does a conversion draw the retirement cap? Where the state lets a conversion draw the capped exclusion, and the filer is at or above the conversion age, the conversion is pooled with distributions against the cap.
New Jersey's values · engine step (compute_state_tax_detail). Sources (Roth conversions): 2025 Form NJ-1040 Instructions (Line 20a) (checked 2026-09-27); Tax Topic Bulletin GIT-2, IRA Withdrawals (checked 2026-09-27) - Retirement exclusion per spouse (both ages known) joint returns with the spouse's age given Full-exclusion states exclude each qualifying spouse's own dollars. Capped states give each spouse the single cap for their own age against their own eligible dollars (pension dollars only where the exclusion is pension-only; employer dollars only below the IRA age), less their military exclusion and half of any Social Security offset. Per-return states (and the pooled-if-both-qualify rule when both qualify) apply the joint cap to the couple's pooled eligible dollars when either spouse qualifies. The income tests then apply once to the summed deduction.
New Jersey's values · engine step (compute_state_tax_detail). Sources (IRA, 401(k) and private pensions): Retirement Income Exclusions (checked 2026-09-27); 2025 Form NJ-1040 Instructions (Line 28a Pension/Retirement Exclusion) (checked 2026-09-27) - Conversion pooled with distributions The conversion joins the distributions against the one cap (with a spouse split in a per-taxpayer state, each spouse's own distributions and conversion against that spouse's cap). Nothing of the conversion is added separately.
New Jersey's values · engine step (compute_state_tax_detail). Sources (Roth conversions): 2025 Form NJ-1040 Instructions (Line 20a) (checked 2026-09-27); Tax Topic Bulletin GIT-2, IRA Withdrawals (checked 2026-09-27) - Retirement exclusion (household) The distributions eligible for the exclusion go through the exclusion below. Taxable public-pension dollars left by a cap are not eligible; below the IRA age only employer-plan dollars are.
New Jersey's values · engine step (compute_state_tax_detail). Sources (IRA, 401(k) and private pensions): Retirement Income Exclusions (checked 2026-09-27); 2025 Form NJ-1040 Instructions (Line 28a Pension/Retirement Exclusion) (checked 2026-09-27) - Conversion taxed or exempt In full-exclusion states a conversion is exempt at the qualifying age (at any age where the state says so). Elsewhere, unless pooled above, it is ordinary income taxed in full.
New Jersey's values · engine step (compute_state_tax_detail). Sources (Roth conversions): 2025 Form NJ-1040 Instructions (Line 20a) (checked 2026-09-27); Tax Topic Bulletin GIT-2, IRA Withdrawals (checked 2026-09-27) - Graduated exclusion by income band Below the exclusion age nothing is excluded. Otherwise the share of the exclusion granted falls with income (Social Security left out); in the middle bands it is a percentage by filing status of the whole pension, limited to the pension, where the state's worksheet says so, otherwise of the capped amount. The separate-return cap applies where set. Engine values, single and head of household: 100% from $0; 37.5% over $100,000; 18.75% over $125,000; 0% over $150,000; joint: 100% from $0; 50% over $100,000; 25% over $125,000; 0% over $150,000; separate: 100% from $0; 25% over $100,000; 12.5% over $125,000; 0% over $150,000.
New Jersey's values · engine step (retirement_distributions_in_state_base). Sources (IRA, 401(k) and private pensions): Retirement Income Exclusions (checked 2026-09-27); 2025 Form NJ-1040 Instructions (Line 28a Pension/Retirement Exclusion) (checked 2026-09-27) - Cap by age tier The full cap at or above the exclusion age, the lower cap at or above the partial age, otherwise none. Joint returns use the joint cap; every other status the single cap.
New Jersey's values · engine step (retirement_distributions_in_state_base). Sources (IRA, 401(k) and private pensions): Retirement Income Exclusions (checked 2026-09-27); 2025 Form NJ-1040 Instructions (Line 28a Pension/Retirement Exclusion) (checked 2026-09-27) - The capped deduction Deduction = the smaller of the eligible distributions and the cap, then reduced by the income limit above; the rest of the distributions stays in the base.
New Jersey's values · engine step (retirement_distributions_in_state_base). Sources (IRA, 401(k) and private pensions): Retirement Income Exclusions (checked 2026-09-27); 2025 Form NJ-1040 Instructions (Line 28a Pension/Retirement Exclusion) (checked 2026-09-27) - One taxpayer's cap joint returns with the spouse's age given For per-spouse calculations, each spouse's cap is the single-column cap for their age tier.
New Jersey's values · engine step (per_taxpayer_cap_single). Sources (IRA, 401(k) and private pensions): Retirement Income Exclusions (checked 2026-09-27); 2025 Form NJ-1040 Instructions (Line 28a Pension/Retirement Exclusion) (checked 2026-09-27) - Long-term gains in the base Where gains are taxed as ordinary income: net long-term gain less the flat exclusion (never below zero), times the inclusion share. Elsewhere none enters.
New Jersey's values · engine step (compute_state_tax_detail). Sources (Capital gains): 2025 Form NJ-1040 Instructions (Schedule NJ-DOP) (checked 2026-09-27) - Age subtraction At or above the age: the single amount, or the joint amount on a joint return (both spouses at the household age). In per-person mode, half the joint amount (or the single amount) per qualifying spouse. Plus the low-income amount below the income test; less the military exclusion where the statute says so; limited to the spouse's own income where the statute says so.
New Jersey's values · engine step (compute_state_tax_detail). Sources (Age 65+ subtractions and credits): 1040i (checked 2026-09-27) - State taxable income Other ordinary income + Social Security, retirement income, conversion and gains left in the base − standard deduction − personal exemption − age subtractions.
engine step (compute_state_tax_detail). Engine convention, no external source: The order of subtraction follows the state forms; each amount is sourced at its own step. - No tax at or below zero State taxable income at or below zero returns a tax of 0 (credits are not refundable and nothing below applies).
engine step (compute_state_tax_detail). Engine convention, no external source: Every credit the engine carries is nonrefundable, so nothing below can make a zero tax negative; each credit is sourced at its own step. - Separate-return scaling married filing separately For the halved-joint rule, taxable income is doubled before the schedule and the result halved.
New Jersey's values · engine step (compute_state_tax_detail). Sources (Rate schedule): 2025 Form NJ-1040 Instructions (Tax Rate Schedules, p.63) (checked 2026-09-27) - The rate schedule Each bracket's rate on the part of taxable income inside it, summed. No rounding: the result is carried in full precision.
New Jersey's values · engine step (apply_state_brackets). Sources (Rate schedule): 2025 Form NJ-1040 Instructions (Tax Rate Schedules, p.63) (checked 2026-09-27) - Credits cannot make the tax negative The credits are subtracted and the result floored at zero.
engine step (compute_state_tax_detail). Engine convention, no external source: Every credit the engine carries is nonrefundable; each credit is sourced at its own step.
Rate schedule
Single
| Taxable income from | to | Rate |
|---|---|---|
| $0 | $20,000 | 1.4% |
| $20,000 | $35,000 | 1.75% |
| $35,000 | $40,000 | 3.5% |
| $40,000 | $75,000 | 5.525% |
| $75,000 | $500,000 | 6.37% |
| $500,000 | $1,000,000 | 8.97% |
| $1,000,000 | and up | 10.75% |
Married filing jointly
| Taxable income from | to | Rate |
|---|---|---|
| $0 | $20,000 | 1.4% |
| $20,000 | $50,000 | 1.75% |
| $50,000 | $70,000 | 2.45% |
| $70,000 | $80,000 | 3.5% |
| $80,000 | $150,000 | 5.525% |
| $150,000 | $500,000 | 6.37% |
| $500,000 | $1,000,000 | 8.97% |
| $1,000,000 | and up | 10.75% |
Head of household
| Taxable income from | to | Rate |
|---|---|---|
| $0 | $20,000 | 1.4% |
| $20,000 | $50,000 | 1.75% |
| $50,000 | $70,000 | 2.45% |
| $70,000 | $80,000 | 3.5% |
| $80,000 | $150,000 | 5.525% |
| $150,000 | $500,000 | 6.37% |
| $500,000 | $1,000,000 | 8.97% |
| $1,000,000 | and up | 10.75% |
Married filing separately: one schedule applies to every filing status, so the engine uses it unscaled with the single deduction.
Source review notes (what the sources do not state outright, or what the engine does not carry):
- No 2026 NJ-1040 rate schedule is published yet; the 2025 schedule is used (rates are statutory, unindexed). N.J.S.A. 54A:2-1 could not be fetched (NJ Legislature hosts unreachable from the checking host).
- 2025 Form NJ-1040 Instructions (Tax Rate Schedules, p.63), New Jersey Division of Taxation. New Jersey taxes single and married-filing-separately filers on Table A (1.4% to 10.75%, edges $20,000/$35,000/$40,000/$75,000/$500,000/$1,000,000) and joint, head-of-household and qualifying-widow(er) filers on Table B (1.4% to 10.75%, edges $20,000/$50,000/$70,000/$80,000/$150,000/$500,000/$1,000,000). Checked 2026-09-27.
Deductions, exemptions and credits
- Standard deduction (or the exemption the engine carries in its place): $1,000 single, $2,000 married filing jointly, and the single amount for head of household.
- 2025 Form NJ-1040 Instructions, New Jersey Division of Taxation. New Jersey has no standard deduction; each filer (and a joint-filing spouse) claims a $1,000 regular exemption, which the engine carries as a $1,000/$2,000 deduction. Checked 2026-09-27.
Age 65+ subtractions and credits
- At age 65 or older: $1,000 is subtracted from the base ($2,000 for a married couple filing jointly when both qualify), against any income. With the spouse's age given, each spouse qualifies on their own age.
- 1040i, New Jersey Division of Taxation. New Jersey Division of Taxation: "Line 7 - Senior 65+ You can claim a $1,000 exemption if you were 65 or older on the last day of the tax year" (and 1 more quoted passage) Checked 2026-09-27.
IRA, 401(k) and private pensions
- Pension, annuity and IRA/401(k) distributions: up to $75,000 excluded per taxpayer ($100,000 on a joint return) at age 62 or older.
- Above the first band the exclusion is a percentage of the whole pension (limited to the eligible amount), and the percentage falls with income (Social Security excluded from the income test): single and head of household 100% from $0; 37.5% over $100,000; 18.75% over $125,000; 0% over $150,000; married filing jointly 100% from $0; 50% over $100,000; 25% over $125,000; 0% over $150,000; married filing separately 100% from $0; 25% over $100,000; 12.5% over $125,000; 0% over $150,000.
- Married filing separately: the cap is $50,000.
- Joint returns: the cap is per return. With both ages given, the age test is met when either spouse qualifies and the $100,000 joint cap covers the couple's pooled income.
Source review notes (what the sources do not state outright, or what the engine does not carry):
- The percentage bands (100%/50%/37.5%/25%/18.75%/12.5%) are hardcoded in state_tax.c, not config fields; they are covered by phrase claims.
- P.L.2021, c.129 (engine citation) could not be fetched: pub.njleg.gov is unreachable from the checking host.
- The Line 28b 'other retirement income exclusion' (unused pension exclusion applied to other income when wages/business income are $3,000 or less) is not modeled by the engine.
- Retirement Income Exclusions, New Jersey Division of Taxation. Filers 62+ (or disabled) with total income up to $150,000 may exclude pension, annuity and IRA income: up to $100,000 joint, $75,000 single/HOH or $50,000 separate at income up to $100,000, and a percentage of taxable pension (50%/37.5%/25% at $100,001-$125,000; 25%/18.75%/12.5% at $125,001-$150,000) above that. Checked 2026-09-27.
- 2025 Form NJ-1040 Instructions (Line 28a Pension/Retirement Exclusion), New Jersey Division of Taxation. Line 28a is the lesser of taxable pension (line 20a) and a filing-status amount: $100,000/$75,000/$50,000 when line 27 income is up to $100,000, else 50%/37.5%/25% or 25%/18.75%/12.5% of line 20a up to $150,000; the income test uses line 27 total income, which excludes Social Security. Checked 2026-09-27.
Public pensions
No separate treatment: public pensions follow the rules for other retirement income above.
- 2025 Form NJ-1040 Instructions (Line 20a), New Jersey Division of Taxation. Federal, state, local government and teachers' pensions are taxable pension income on line 20a and share the same capped pension exclusion as private pensions; U.S. military pensions are exempt. Checked 2026-09-27.
Military retirement pay
- Military retirement pay is fully exempt, at any age.
- Rules are applied per taxpayer at that person's own age when the spouse's age is given. API value:
rules.militaryRetirement.treatment: "exempt".
- Njit6.shtml, New Jersey Division of Taxation. Military pensions and survivor benefit payments are exempt, at any age. Checked 2026-09-27.
Roth conversions
A conversion draws the retirement-income exclusion together with distributions from age 62; the part above the cap is taxed as ordinary income.
Source review notes (what the sources do not state outright, or what the engine does not carry):
- The engine treats the whole federally taxable conversion as NJ income; NJ excludes previously taxed IRA contributions (NJ never allowed a deduction for them), which the engine does not track.
- 2025 Form NJ-1040 Instructions (Line 20a), New Jersey Division of Taxation. The taxable part of a traditional-to-Roth IRA conversion is reported on line 20a with other pension/IRA income, so at 62+ it shares the Line 28a pension exclusion. Checked 2026-09-27.
- Tax Topic Bulletin GIT-2, IRA Withdrawals, New Jersey Division of Taxation. When a traditional IRA is converted to a Roth IRA, only amounts not previously taxed by New Jersey (earnings and pre-tax rollovers such as 401(k) money) are New Jersey income in the conversion year. Checked 2026-09-27.
Capital gains
- Net long-term gain is taxed as ordinary income.
- Short-term gains are ordinary income.
- 2025 Form NJ-1040 Instructions (Schedule NJ-DOP), New Jersey Division of Taxation. Capital gains are reported on Schedule NJ-DOP as net gains from disposition of property and taxed at the regular NJ rates; there is no separate long-term rate or exclusion. Checked 2026-09-27.
Worked examples
Computed by the engine for the fixed households below (the same ones for every state, so states compare directly). Federal tax is not supplied, so a federal-tax deduction is not taken; the income tests use the sum of the components as income.
| Household (engine inputs) | State tax |
|---|---|
| Single, 67: $30,000 private pension, $20,000 IRA, $10,000 interest, $24,000 Social Security ($17,000 federally taxable), $5,000 long-term gain | $182 |
| Married filing jointly, 70: $40,000 public pension, $40,000 IRA, $20,000 interest, $40,000 Social Security ($34,000 federally taxable), $10,000 long-term gain | $1,197 |
| Single, 60: $60,000 other ordinary income and a $50,000 Roth conversion | $4,817.05 |
| Married filing jointly, 66: $30,000 IRA, a $40,000 Roth conversion, $30,000 Social Security ($25,500 federally taxable) | $0 |
| Single, 58: $36,000 military retirement pay and $30,000 wages | $437.50 |
| Married filing jointly, ages 67 and 61: $50,000 IRA, $10,000 interest, $30,000 Social Security ($25,500 federally taxable), each spouse's age given | $490 |
Line by line
The intermediate lines the engine records while it computes each example (its detail record, printed as it comes out; lines that are zero are left out). The engine's documentation build checks that the lines add up to the taxable income and the tax, for every state, filing status and a grid of households. Each line links the engine step that produces it.
Single, 67: $30,000 private pension, $20,000 IRA, $10,000 interest, $24,000 Social Security ($17,000 federally taxable), $5,000 long-term gain: $182
| Line | Amount |
|---|---|
| Income total used by the income tests | $82,000 |
| Retirement income and conversions excluded (not in the base) | $50,000 |
| + Other ordinary income in the base | $10,000 |
| + Long-term gain in the base | $5,000 |
| − Standard deduction | $1,000 |
| − Age subtractions and deductions | $1,000 |
| = State taxable income | $13,000 |
| Tax from the rate schedule | $182 |
| = Tax before credits | $182 |
| = Tax | $182 |
Married filing jointly, 70: $40,000 public pension, $40,000 IRA, $20,000 interest, $40,000 Social Security ($34,000 federally taxable), $10,000 long-term gain: $1,197
| Line | Amount |
|---|---|
| Income total used by the income tests | $144,000 |
| Retirement income and conversions excluded (not in the base) | $40,000 |
| + Other ordinary income in the base | $20,000 |
| + Retirement income in the base | $40,000 |
| + Long-term gain in the base | $10,000 |
| − Standard deduction | $2,000 |
| − Age subtractions and deductions | $2,000 |
| = State taxable income | $66,000 |
| Tax from the rate schedule | $1,197 |
| = Tax before credits | $1,197 |
| = Tax | $1,197 |
Single, 60: $60,000 other ordinary income and a $50,000 Roth conversion: $4,817.05
| Line | Amount |
|---|---|
| Income total used by the income tests | $110,000 |
| + Other ordinary income in the base | $60,000 |
| + Roth conversion in the base | $50,000 |
| − Standard deduction | $1,000 |
| = State taxable income | $109,000 |
| Tax from the rate schedule | $4,817.05 |
| = Tax before credits | $4,817.05 |
| = Tax | $4,817.05 |
Married filing jointly, 66: $30,000 IRA, a $40,000 Roth conversion, $30,000 Social Security ($25,500 federally taxable): $0
Single, 58: $36,000 military retirement pay and $30,000 wages: $437.50
| Line | Amount |
|---|---|
| Income total used by the income tests | $66,000 |
| Military pay excluded (not in the base) | $36,000 |
| + Other ordinary income in the base | $30,000 |
| − Standard deduction | $1,000 |
| = State taxable income | $29,000 |
| Tax from the rate schedule | $437.50 |
| = Tax before credits | $437.50 |
| = Tax | $437.50 |
Married filing jointly, ages 67 and 61: $50,000 IRA, $10,000 interest, $30,000 Social Security ($25,500 federally taxable), each spouse's age given: $490
| Line | Amount |
|---|---|
| Income total used by the income tests | $85,500 |
| Retirement income and conversions excluded (not in the base) | $25,000 |
| + Other ordinary income in the base | $10,000 |
| + Retirement income in the base | $25,000 |
| − Standard deduction | $2,000 |
| − Age subtractions and deductions | $1,000 |
| = State taxable income | $32,000 |
| Tax from the rate schedule | $490 |
| = Tax before credits | $490 |
| = Tax | $490 |
What the engine does not calculate, and known approximations
- The Line 28b 'other retirement income exclusion' (unused pension exclusion applied to other income when wages/business income are $3,000 or less) is not modeled by the engine. (IRA, 401(k) and private pensions)
What the engine does not calculate for any state (itemized deductions, credits beyond those listed, part-year residents, dependents, blindness and disability, and more) is listed on the calculation order page.
Verification
Worksheet-tested Engine 1.2.0 tests follow the NJ-1040 pension exclusion worksheet (band percentage of the whole pension) and Tables A and B.
- Golden scenarios (hand-computed expected tax, asserted to within $1):
G26NJC,G26NJB. - State-specific unit tests:
test_nj_income_cliff,test_no_state_uses_placeholder_schedule,test_nj_conversion_and_partial_band,test_nj_worksheet_mfs_hoh_senior. - Structural tests covering every state: 3.
- State forms and worksheets followed in the test derivations: NJ-1040 instructions, pension exclusion worksheet; Tax Rate Tables A and B.
Social Security
Social Security benefits are fully exempt: none of the federally taxable amount enters the state base.
API value:
socialSecurityRule: "exempt". The engine's input is the federally taxable amount; income tests use the sum of the income components as the adjusted-gross-income proxy.