New Jersey gross income tax on Forms NJ-1040 and NJ-1040NR for 2026 and 2025: residency, income categories and loss netting, rate schedules, exemptions, retirement exclusions, property tax deduction or credit, NJEITC, Child Tax Credit, credit for tax paid to New York, depreciation and section 179 adjustments, estimates, extension and penalties.
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| Taxable income over | But not over | Rate | Subtract |
|---|---|---|---|
| $0 | $20,000 | 1.4% | $0 |
| $20,000 | $35,000 | 1.75% | $70.00 |
| $35,000 | $40,000 | 3.5% | $682.50 |
| $40,000 | $75,000 | 5.525% | $1,492.50 |
| $75,000 | $500,000 | 6.37% | $2,126.25 |
| $500,000 | $1,000,000 | 8.97% | $15,126.25 |
| $1,000,000 | and over | 10.75% | $32,926.25 |
This Guide covers the New Jersey gross income tax for individuals: the resident return, Form NJ-1040, and the nonresident return, Form NJ-1040NR. The primary year is tax year 2026 (returns filed in 2027). A dated section covers 2025 returns (due 15 April 2026, or 15 October 2026 on a valid extension). It is written for employees, retirees, sole proprietors and owners of a single-member LLC disregarded for federal tax.
The 2026 Form NJ-1040 instructions were not published when this Guide was written (25 September 2026). The Division of Taxation's 2026 Form NJ-1040-ES (2026 NJ-1040-ES instructions) prints the same rate schedules and exemption amounts as 2025, and says the retirement exclusions "only apply for taxpayers with income up to $150,000". Where a figure comes only from the 2025 instructions, it is labelled 2025.
Who is a resident (GIT-6, Part-Year Residents and Nonresidents):
Who must file (2025 NJ-1040 instructions). A return is required if gross income from everywhere, for the entire year, was more than $10,000 (single, or married/civil union partner filing separately) or $20,000 (married/civil union couple filing jointly, head of household, qualifying widow(er)/surviving civil union partner). File anyway to get a refund of New Jersey withholding or estimated tax, or to claim the New Jersey Earned Income Tax Credit or another credit that gives a refund.
Not covered (see "When to refuse or refer"): trusts and estates (Form NJ-1041), amended returns (Form NJ-1040X), the entity side of the Pass-Through Business Alternative Income Tax (BAIT) and the Corporation Business Tax, which are in the separate Guide nj-cbt-and-bait, and New Jersey inheritance tax.
Form NJ-1040 line numbers are from the 2025 return (2025 NJ-1040 instructions).
Tax = taxable income (line 42) x rate, minus the subtraction amount for the band. The 2026 Form NJ-1040-ES prints the same two tables as the 2025 instructions.
Table A: single, and married/civil union partner filing separately
| Taxable income over | But not over | Rate | Subtract |
|---|---|---|---|
| $0 | $20,000 | 1.4% | $0 |
| $20,000 | $35,000 | 1.75% | $70.00 |
| $35,000 | $40,000 | 3.5% | $682.50 |
| $40,000 | $75,000 | 5.525% | $1,492.50 |
| $75,000 | $500,000 | 6.37% | $2,126.25 |
| $500,000 | $1,000,000 | 8.97% | $15,126.25 |
| $1,000,000 | and over | 10.75% | $32,926.25 |
Table B: married/civil union couple filing jointly, head of household, qualifying widow(er)/surviving civil union partner
| Taxable income over | But not over | Rate | Subtract |
|---|---|---|---|
| $0 | $20,000 | 1.4% | $0 |
| $20,000 | $50,000 | 1.75% | $70.00 |
| $50,000 | $70,000 | 2.45% | $420.00 |
| $70,000 | $80,000 | 3.5% | $1,154.50 |
| $80,000 | $150,000 | 5.525% | $2,775.00 |
| $150,000 | $500,000 | 6.37% | $4,042.50 |
| $500,000 | $1,000,000 | 8.97% | $17,042.50 |
| $1,000,000 | and over | 10.75% | $34,842.50 |
New Jersey has no standard deduction. Exemptions are subtracted from New Jersey gross income.
| Exemption | Amount | Condition |
|---|---|---|
| Taxpayer; spouse or civil union partner if filing jointly; or a registered domestic partner | $1,000 each | Domestic partner only if registered in New Jersey by 31 December and not filing a New Jersey return |
| Age 65 or older | $1,000 more each | Taxpayer and joint-filing spouse only, 65 or older on the last day of the year |
| Blind or disabled | $1,000 more each | Taxpayer and joint-filing spouse only, on the last day of the year |
| Veteran | $6,000 more each | Honorably discharged or released under honorable circumstances from active duty before the last day of the year; documentation needed the first time |
| Each dependent | $1,500 | Must qualify as a dependent for federal purposes, with a valid SSN, ITIN or ATIN |
| Dependent attending college | $1,000 more | Dependent under 22 on the last day of the year, full-time at an accredited school for some part of each of five calendar months, and the taxpayer paid at least half of tuition and maintenance |
Social Security, Railroad Retirement and U.S. military pensions are not taxable at all and are never entered. The exclusions below apply to taxable pensions, annuities and IRA withdrawals (line 20a) and, if unused, to other income.
Pension exclusion (line 28a). Allowed only if the taxpayer (or the spouse, if filing jointly) was 62 or older, or blind or disabled under Social Security guidelines on the last day of the year, and total income on line 27 is $150,000 or less. On a joint return where only one spouse qualifies, only that spouse's pension counts. The exclusion is the lesser of line 20a and:
| Filing status | Line 27 is $0 to $100,000 | $100,001 to $125,000 | $125,001 to $150,000 |
|---|---|---|---|
| Married/civil union couple filing jointly | $100,000 | 50% of line 20a | 25% of line 20a |
| Single, head of household, qualifying widow(er) | $75,000 | 37.5% of line 20a | 18.75% of line 20a |
| Married/civil union partner filing separately | $50,000 | 25% of line 20a | 12.5% of line 20a |
Above $150,000 of line 27 there is no exclusion at all: this is a cliff, not a phase-out.
Other retirement income exclusion (line 28b, Worksheet D). Only for someone 62 or older (disability alone does not qualify). Line 27 must be $150,000 or less, and wages plus business, partnership and S corporation income (lines 15, 18, 21 and 22) must be not more than $3,000. The unused part of the maximum exclusion (the same table, but as a percentage of line 27 in the two upper bands) can then be excluded. On a joint return where only one spouse is 62 or older, only that spouse's income counts.
Special exclusion. $6,000 (joint, head of household, qualifying widow(er)) or $3,000 (single, married filing separately) for someone who will never be able to receive Social Security or Railroad Retirement benefits because their employer did not take part in either programme. Do not claim it if either spouse will ever be eligible.
| New Jersey taxable income (line 42) | Credit per child (2025) |
|---|---|
| $30,000 or less | $1,000 |
| Over $30,000, not over $40,000 | $800 |
| Over $40,000, not over $50,000 | $600 |
| Over $50,000, not over $60,000 | $400 |
| Over $60,000, not over $80,000 | $200 |
The Division's page, updated 15 July 2026, still shows 2025 as the latest year; check it for 2026 amounts before filing a 2026 return.
| Item | New Jersey treatment |
|---|---|
| Starting point | Its own income categories, not federal AGI; wages from W-2 box 16 |
| 401(k) contributions | Not taxed when made: employer and employee 401(k) contributions up to the federal limit are excluded; the distributions are taxed later |
| Other retirement contributions (403(b), 457, SEP, federal Thrift Savings Plan) | Included in New Jersey wages when earned, so box 16 can exceed box 1 |
| IRA and Keogh contributions | Not deductible |
| Self-employed health insurance | Deductible, as part of line 31 |
| Self-employed 401(k) contributions | Deducted in Schedule NJ-BUS-1, up to the federal limits |
| Social Security, Railroad Retirement | Not taxable |
| Capital gains | Ordinary rates; losses only against gains in the same category, no carryover |
| Net operating losses | No carryback or carryforward; only the Alternative Business Calculation Adjustment |
| Section 179 | New Jersey maximum is $25,000; the federal reduced dollar limit applies using that $25,000; no business-income limit; unused amounts cannot be carried forward |
| Bonus depreciation | Worksheet GIT-DEP allows the federal 30% allowance and not the 50% allowance; the NJ-1040 instructions require an adjustment whenever the federal special bonus allowance or section 179 was deducted for assets placed in service from 1 January 2004 |
| Alimony | Court-ordered payments made are deducted (line 32) and payments received are income (line 25); the instructions set no agreement-date limit |
| New federal deductions from P.L. 119-21 (tips, overtime, car loan interest, seniors) and the QBI deduction | Our reasoning, not a Division statement: these are federal deductions taken after AGI, and New Jersey income starts from W-2 box 16 state wages (2025 NJ-1040 instructions, page 4) and the category lines, so they do not reduce it |
GIT-DEP names only the 30% and 50% federal allowances. For assets on which the full (100%) bonus depreciation was taken federally (as allowed again by P.L. 119-21), compute New Jersey depreciation without the bonus on Worksheet GIT-DEP and confirm the treatment with the Division before filing.
| Situation | Rule | Source |
|---|---|---|
| Single, gross income for the year exactly $10,000 | No filing requirement: it must be more than $10,000. File anyway to recover withholding or claim NJEITC | 2025 NJ-1040 instructions |
| Not domiciled in New Jersey, permanent New Jersey home, exactly 183 days there | Not a resident: needs more than 183 days | GIT-6 |
| Domiciled in New Jersey, lived abroad all year with a permanent home there, no New Jersey home, 30 days in New Jersey | Nonresident: all three conditions met (30 days is not more than 30) | same |
| Joint filers, both 65, line 27 exactly $100,000, pension $60,000 | Band $0 to $100,000: pension exclusion $60,000; unused $40,000 may go on line 28b if earned income is not more than $3,000 | 2025 NJ-1040 instructions |
| Same couple, line 27 more than $150,000 | No pension exclusion and no other retirement income exclusion | same |
| Age 61 and disabled | Pension exclusion allowed; other retirement income exclusion not allowed (needs age 62) | same |
| Taxable income exactly $80,000, child aged 4 | Child Tax Credit $200 (over $60,000, not over $80,000) | Division Child Tax Credit page |
| Taxable income more than $80,000 | No Child Tax Credit | same |
| Property tax deduction saves less than $50 | Take the $50 credit instead | 2025 NJ-1040 instructions |
| Taxable income exactly $100,000 | Rate schedules must be used, not the tax table | same |
| Schedule C loss and wage income | Loss makes no entry on line 18 and does not reduce wages; see Schedule NJ-BUS-2 | same |
| Tax for the year after withholding and credits exactly $400 | No estimated payments required: they are required only if tax is more than $400 | 2026 NJ-1040-ES instructions |
| Paid less than 80% of the tax by 15 April, filed by 15 October | Extension denied retroactively; penalties and interest from 15 April | Form NJ-630 |
Assumed facts, computed with the rate schedules. Below $100,000 of line 42 the return uses the Tax Table, which can differ by about $1; Cases 2 and 6 show both.
Case 1: single sole proprietor who rents, 2026. Schedule C profit $130,000, no New Jersey adjustments; self-employed health insurance $8,000; one $1,000 exemption; rent paid on the main home $30,000; no withholding. Line 29: $130,000. Taxable income (line 39): $130,000 - $1,000 - $8,000 = $121,000. Property tax: 18% of $30,000 = $5,400. Worksheet H: with the deduction, taxable income is $115,600 and the tax is $115,600 x 6.37% - $2,126.25 = $5,237.47; without it, $121,000 x 6.37% - $2,126.25 = $5,581.45. The deduction saves $343.98, which is $50 or more, so take the deduction. Tax: $5,237.47. Estimated tax is required (more than $400); four equal installments of $1,309.37 are due 15 April, 15 June, 15 September 2026 and 15 January 2027.
Case 2: retired couple, 2025. Married filing jointly, both 67. Pension $60,000 (line 20a), interest $30,000, dividends $20,000, Social Security (not entered). Line 27 = $110,000, in the $100,001 to $125,000 band. Pension exclusion: lesser of $60,000 and 50% of $60,000 = $30,000. Worksheet D: maximum 50% of $110,000 = $55,000; unused $25,000; no wages or business income, so line 28b is $25,000. Line 29 = $110,000 - $55,000 = $55,000. Exemptions: $1,000 x 2 plus $1,000 x 2 for age = $4,000. Taxable income $51,000 (no property tax benefit in this example). Table B: $51,000 x 2.45% - $420 = $829.50; the Tax Table (required below $100,000) gives $830.
Case 3: losses stay in their category, 2026. Single. Wages (box 16) $70,000; Schedule C loss $20,000; stock gains $5,000 and stock losses $12,000; rental profit $6,000. Line 15: $70,000. Line 18: no entry (loss). Line 19: net loss of $7,000, so no entry, and it is not carried forward. Line 23: $6,000. Line 27: $76,000. The business loss can only help through Schedule NJ-BUS-2 (line 35).
Case 4: New York commuter, 2025. Single New Jersey resident who works every day in a New York office. Wages $200,000 (all taxed by New York), bank interest $10,000; lives rent-free with family, so no property tax benefit. Line 29: $210,000. Taxable income: $209,000. Tax: $209,000 x 6.37% - $2,126.25 = $11,187.05. New York tax paid on the $200,000: $12,000 (assumed). Credit limit: $11,187.05 x ($200,000 / $210,000) = $10,654.33, which is less than $12,000, so the credit is $10,654.33 and New Jersey tax after the credit is $532.72.
Case 5: section 179 over the New Jersey cap, 2026. A sole proprietor buys $80,000 of equipment and deducts all of it under federal section 179. For New Jersey, only $25,000 is allowed as section 179; the other $55,000 becomes New Jersey depreciable basis, recovered through regular depreciation on Worksheet GIT-DEP. First-year New Jersey adjustment (added to Schedule NJ-BUS-1): $80,000 - $25,000 - first-year New Jersey depreciation on $55,000. Later years give subtractions, and a sale uses the New Jersey basis.
Case 6: working parent, 2025. Head of household, one child aged 3, New Jersey taxable income $35,000, federal EIC claimed and allowed $4,000 (assumed), New Jersey withholding $600. Tax (Table B): $35,000 x 1.75% - $70 = $542.50. NJEITC: 40% x $4,000 = $1,600. Child Tax Credit (over $30,000, not over $40,000): $800. Payments and refundable credits: $600 + $1,600 + $800 = $3,000. Refund on the schedule figure: $2,457.50. The Tax Table (required below $100,000) gives tax of $543, so the refund on the return is $2,457.
Case 7: extension that fails the 80% test, 2025 return. Tax liability $10,000 (line 45). Paid by 15 April 2026: $7,500, below 80% ($8,000). The extension is denied, and penalties and interest run from 15 April 2026 even if the return is filed by 15 October. Filed 30 September 2026 with $2,500 still due: late filing penalty 5% per month or part month, capped at 25%, is $625; a $100 penalty may also be charged for each month the return is late; late payment penalty 5% is $125; plus interest at 3% above prime.
Case 8: nonresident with New Jersey rent, 2025 (Form NJ-1040NR). Single, income from everywhere $200,000, of which New Jersey rental income $50,000. Income percentage: $50,000 / $200,000 = 25%. Taxable income (column A, after the $1,000 exemption): $199,000. Tax on it: $199,000 x 6.37% - $2,126.25 = $10,550.05. New Jersey tax: 25% x $10,550.05 = $2,637.51.
2025 returns (dated section).
2026 estimated tax (2026 NJ-1040-ES instructions).
Penalties and interest (2025 NJ-1040 instructions).
Paying. E-check or credit card online, or check with Form NJ-1040-V payable to "State of New Jersey – TGI". Refunds must generally be claimed within three years of the due date, including extensions.
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