Payroll tax in New Jersey: What employers need to know [Updated 2026]

One of the most painful chores every employer has to deal with is tax payments. While many small businesses want to cross taxes off their list quickly, such an approach could be risky, resulting in mistakes or, worse yet, financial penalties.

For companies operating in New Jersey, understanding the complex tax landscape is more than a fiscal responsibility; it's a legal obligation. The state of New Jersey follows a progressive tax scheme with up to eight income classes. On top of federal and state laws, there are also local payroll obligations some NJ employees must fulfill.

If you operate or have staff members living in New Jersey, you must be aware of the different payroll taxes you need to settle, along with their rates and payment deadlines. Let's dive in.

New Jersey payroll taxes

New Jersey companies have both state and federal tax obligations.

The Division of Taxation is responsible for handling New Jersey taxes at the state level. There are four types of state payroll taxes in New Jersey. Here's a quick reference for 2026 rates: the SUI taxable wage base is $44,800 (new employer rate 2.8%); the TDI/FLI employee wage base is $171,100 (employee TDI rate 0.19%, employee FLI rate 0.23%); state income tax ranges from 1.5% to 10.75% based on income bracket; and the Workforce Development/Supplemental Workforce Fund adds 0.1175% for employers. We cover each in detail below.

State income tax

On top of federal income taxes (paid to the IRS), companies that employ workers in New Jersey must also withhold state income tax from their employees' salaries. This also applies to workers who are nonresidents; however, employees who are subject to income tax in another jurisdiction and whose income tax rate is the same as or higher than New Jersey's rate might be exempt from this obligation.

New Jersey has a progressive tax system, which features seven or eight income classes depending on the taxpayer's filing status. The income tax rate depends on the employee's income level and ranges from 1.5% to 10.75% for 2026. The 10.75% top rate applies to all individuals with gross income exceeding $1 million.

Income taxes include contributions of 0.1175% to the Workforce Development/Supplemental Workforce Fund.

It's worth knowing that Pennsylvania residents working in the state don't need to pay New Jersey income tax. Under a reciprocal personal income tax agreement between the two states, they only pay tax in their home state. Similarly, New Jersey residents don't need to pay taxes in Pennsylvania, even if they perform work there.

For more New Jersey income tax withholding instructions, consult the NJ Division of Taxation withholding guide.

Temporary Disability Insurance (TDI) and Family Leave Insurance (FLI)

New Jersey's Temporary Disability Insurance (TDI) is a cash benefit for employees who are found unable to work due to a health condition or another circumstance disabling them from the workforce. It also covers time off during pregnancy and postpartum recovery.

Both employers and employees contribute to TDI. The taxable wage cap is revisited annually and set based on the average weekly salary in the state. For 2026, the employee TDI rate is 0.19% (down from 0.23% in 2025) on wages up to $171,100, for a maximum annual employee contribution of $325.09. The new employer TDI rate is 0.50%; experience-rated employers are assigned rates by the NJDOL.

Family Leave Insurance (FLI) provides paid leave to employees who need to bond with a new child, care for a seriously ill family member, or participate in a qualifying military event. FLI is funded entirely by employee payroll deductions. For 2026, the employee FLI rate is 0.23% (down from 0.33% in 2025) on wages up to $171,100.

An alternative to the state TDI/FLI plan is private insurance plans. Employers not covered by federal programs may choose to offer a private plan as part of a wider workers' comp arrangement. These plans aren't taxable but qualify as ordinary and necessary business expenses, making them eligible for a tax deduction.

Unemployment insurance tax

All companies with at least one worker paid over $1,000 per year are subject to State Unemployment Insurance (SUI) tax under New Jersey's State Unemployment Tax Act (SUTA). For 2026, SUI is calculated on a taxable wage base of $44,800 (up from $43,300 in 2025). Employer rates are assigned under Table C for fiscal year 2025–2026, ranging from 0.5% to 5.8% depending on the employer's experience rating. The new employer rate is 2.8%, which includes the Workforce Development/Supplemental Workforce Fund surcharge of 0.1175%.

SUI rates are calculated on an annual basis according to the fiscal year, running from July 1 to June 30. For new employers, the SUI rate stays the same for three calendar years, after which it is adjusted annually based on their claims history.

Only companies that employ agricultural or domestic workers and some nonprofit organizations are exempt from New Jersey's state unemployment taxes. Employers who pay SUI taxes may be eligible for a credit of up to 5.4% against their federal FUTA obligation.

Local payroll taxes

In addition to state taxes, some cities within New Jersey enforce their own tax regulations and wage laws. Cities with local payroll taxes include:

• Newark: 1% payroll tax paid by employers. Certain exemptions apply.

• Jersey City: 1% payroll tax paid by employers. Certain exemptions apply.

Wrapping your head around payroll taxes can be overwhelming, especially with a tax system as complex as New Jersey's. Luckily, Rippling's payroll compliance software can take this burden off your shoulders. Rippling calculates all your taxes and pays them automatically on your behalf. It also submits correct tax forms to the right authorities, keeping you compliant with federal and New Jersey state and local laws. And if you need help registering and maintaining your state tax accounts, Rippling's PEO can do that for you.

Automatically calculate, withhold, and pay taxes

See Rippling

Payroll tax due dates in New Jersey

In New Jersey, income tax must be withheld from workers' salaries and employer payments and remitted electronically to the state. Depending on a few factors, income tax will need to be paid weekly, monthly, quarterly, or annually. These conditions include whether you employ a domestic worker and how much income tax you need to withhold each year.

• Weekly payments: New Jersey employers who owe $10,000 or more annually in income tax withholdings are weekly payers. Taxes must be paid on or before the Wednesday of the week following the week in which the payday(s) occurred.

• Monthly/quarterly payments: Employers who aren't weekly payers are subject to either monthly or quarterly payments. If the tax obligation exceeds $500, you need to pay on or before the 15th day of the month after the end of the reporting period. Taxes for the third month of each quarter are remitted on a quarterly basis. If the tax obligation for the first and/or second month of the quarter was under $500, those months may also be settled on a quarterly basis.

• Annual payments: These apply to domestic employers who secure federal taxes for employees working from their household. The tax payment deadline for the prior year is January 31.

The remaining payroll taxes (disability and unemployment) are due each quarter by the 30th of the first month of the new quarter. Local taxes for Jersey City and Newark are also settled quarterly and due by the last day of the first month of the next quarter (for example, April 30 for Q1).

If an employer settles payroll taxes after their due date, they may be subject to penalties of 5% to 25% of the balance due, along with interest.

How to submit payroll taxes in New Jersey

In New Jersey, all businesses must process their payments electronically via Electronic Fund Transfers (EFTs). They can choose from Automated Clearing House (ACH) debit or ACH credit, credit card, or an electronic check (e-check).

ACH debit/ACH credit

To settle payroll taxes using ACH debit or credit:

• First, enroll with the Division of Revenue.

• If you use ACH debit, the state can initiate an electronic withdrawal from your bank account. The state covers all processing costs.

• If you use ACH credit, you ask the bank to transfer your liability to the state's bank account. You cover any fees for the transfer.

Electronic Check (e-check)

To use an e-check:

• Visit the Division of Taxation website.

• Provide your New Jersey taxpayer identification number along with either your 4-digit PIN or the initial four characters of your taxpayer name as registered.

• You'll also need your 9-digit bank routing number and account number.

Any taxpayer with a bank account is allowed to settle taxes via e-check without making any special arrangements with their bank.

Credit card

Companies can settle their annual, quarterly, and monthly payroll tax obligations online via approved credit cards: American Express, Discover, or Visa. The transaction fee is added to the tax payment and covered by the taxpayer.

Rippling's full-service payroll software

Looking for a way to quickly settle all your taxes? Rippling's payroll software is so advanced it practically runs itself. Beyond automating compliance tasks, it ensures timely and accurate submission of your federal, New Jersey state, and local payroll taxes to the right authorities.

Frequently Asked Questions