New Jersey Tax Rates & Thresholds — 2026 Reference for Businesses & High Earners
The rates that actually move money in New Jersey — income, business, sales, real-estate transfer, and inheritance tax — each one sourced to a primary NJ.gov page.
General information, not tax advice. Every rate below is current for tax year 2026 and verified against a primary New Jersey or federal government source (linked at each section). Reviewed 2026-07-04. Tax law changes often. Confirm any figure against the linked source, or with your CPA, before you rely on it. Reading this page does not create a CPA-client relationship.
New Jersey runs some of the highest state tax rates in the country. For a business owner or a high earner, the exact numbers matter. They drive entity choices, the timing of a sale, and whether a workaround like the BAIT election is worth the paperwork. This page gathers the rates in one place so you are not piecing them together from scattered state pages.
Two of these figures changed recently. New Jersey overhauled its realty transfer "mansion tax" in July 2025, and the seller now pays it. The old corporate surtax was replaced by a Corporate Transit Fee. Both are covered below, with the primary source next to each.
Every number here links to the New Jersey Division of Taxation or the relevant federal source. If a figure ever looks off, check the link. We date-stamp this page for the same reason.
New Jersey Income Tax (Gross Income Tax)
New Jersey taxes personal income on a graduated schedule. The brackets and the exact breakpoints depend on your filing status. The two figures that matter most for planning are the floor and the ceiling.
| Bracket | Rate | Applies to |
|---|---|---|
| Lowest bracket | 1.4% | First tier of taxable income |
| Top bracket | 10.75% | Taxable income over $1,000,000 (all filing statuses) |
The 10.75% top rate has applied since January 1, 2020, when New Jersey lowered the threshold for its top bracket to $1 million. Several graduated brackets sit between the floor and the ceiling.
One point catches high earners off guard. New Jersey does not give capital gains a lower rate. It taxes gains as ordinary income, at the same graduated rates up to 10.75%. That matters most when you sell a business, real estate, or a concentrated stock position. The state takes its share at the top rate.
Most of this tax is collected as you go. Employers withhold New Jersey income tax from wages. The self-employed and investors pay it through quarterly estimates. The top rate still catches up at filing once total income clears $1 million.
Source: NJ Division of Taxation — NJ Income Tax Rates and 2020 rate change.
New Jersey Business Taxes
Corporation Business Tax (CBT)
C-corporations pay the Corporation Business Tax on income allocated to New Jersey. The rate steps down for smaller corporations.
| Entire net income | Rate |
|---|---|
| Over $100,000 | 9% |
| $50,001 – $100,000 | 7.5% |
| $50,000 or less | 6.5% |
Corporate Transit Fee. A 2.5% fee applies to Corporation Business Tax income over $10 million. It runs for privilege periods from January 1, 2024 through December 31, 2028. It is charged on top of the regular CBT. This fee replaced the earlier corporate surtax, which expired at the end of 2023.
Two more points on the CBT. Every C-corporation owes at least a minimum tax. It is set on a sliding scale by New Jersey gross receipts, even in a loss year. Related companies that run as one business file a single combined return. New Jersey S-corporations pay only that minimum tax here. The rest of their income flows through to the owners.
Source: NJ Division of Taxation — CBT Overview and Corporate Transit Fee.
Pass-Through Business Alternative Income Tax (BAIT)
The BAIT is New Jersey's workaround for the federal SALT deduction cap. A partnership, S-corporation, or multi-member LLC can elect to pay tax at the entity level. The rate is graduated.
| Distributive proceeds | Rate |
|---|---|
| $0 – $250,000 | 5.675% |
| $250,001 – $1,000,000 | 6.52% |
| Over $1,000,000 | 10.9% |
The mechanism is what makes it worth the paperwork. The entity pays the BAIT and deducts it on the federal return. Each owner then claims a refundable New Jersey credit for their share. That turns a state tax the SALT cap would otherwise block into a federal deduction. The election is annual, so owners usually decide early in the year.
You can model the federal benefit with our NJ BAIT savings calculator. For the mechanics and the trade-offs, see our NJ SALT workaround guide.
Source: NJ Division of Taxation — PTE/BAIT rate schedule.
New Jersey Sales & Use Tax
The statewide Sales and Use Tax rate is 6.625%. It covers most tangible personal property, specified digital products, and certain services, unless an exemption applies. Out-of-state sellers with economic nexus register and file under the same rate.
Not everything is taxed. New Jersey exempts most clothing and footwear, and unprepared groceries, among other categories. Prepared food, many digital products, and some services are taxable. Businesses in a designated Urban Enterprise Zone may collect a reduced rate on qualifying in-person sales. The taxability of a specific item is always worth confirming before you collect or remit.
The "use" half of the tax is easy to miss. Say you buy taxable goods and pay no sales tax, online or across a state line. New Jersey still expects use tax at the same 6.625% rate. Businesses report it on the sales tax return. Individuals report it on the New Jersey income tax return. It is the same rate either way.
Filing dates for the quarterly ST-50 return live on our NJ tax calendar. Online sellers should also review multi-state sales tax and Wayfair nexus.
Source: NJ Division of Taxation — Sales and Use Tax.
Real Estate Transfer & "Mansion Tax" (2025 Change)
New Jersey overhauled its supplemental realty transfer fee in July 2025 (P.L. 2025, c. 69). Two things changed. The fee became graduated on higher-value sales. It also shifted to the seller. Before the change, the buyer paid a flat 1% on sales over $1 million. The rate now holds at 1% from $1 million to $2 million, then climbs in steps above $2 million. The new structure applies to deeds recorded on or after July 10, 2025.
| Sale price | Fee |
|---|---|
| $1,000,000 – $2,000,000 | 1% |
| $2,000,000 – $2,500,000 | 2% |
| $2,500,000 – $3,000,000 | 2.5% |
| $3,000,000 – $3,500,000 | 3% |
| Over $3,500,000 | 3.5% |
There was a narrow refund window during the switch-over. Sellers under a contract signed before July 10, 2025 and recorded by November 15, 2025 could claim back anything they paid above the old 1% rate. That window has largely closed, so most sales now follow the graduated schedule above.
Nonresident sellers face a separate item at closing — a Gross Income Tax prepayment often called the "NJ exit tax." It is a credit, not an extra tax, but it ties up cash until the return is filed. Our NJ exit tax and mansion tax guide walks through both.
Source: NJ Division of Taxation guidance on the Graduated Percent Fee (P.L. 2025, c. 69, amending N.J.S.A. 46:15-7.2) and State of New Jersey — Important Changes to Property Transfer Fees.
New Jersey Inheritance & Estate Tax
New Jersey repealed its estate tax for deaths on or after January 1, 2018. The inheritance tax is a different tax, and it still applies. What a beneficiary owes depends on their relationship to the person who died, not on the size of the estate.
| Class | Who | Rate |
|---|---|---|
| Class A | Spouse, child, grandchild, parent, grandparent | Exempt |
| Class C | Sibling, son- or daughter-in-law | First $25,000 exempt, then 11%–16% |
| Class D | Other beneficiaries | 15% up to $700,000; 16% above |
| Class E | Qualified charities | Exempt |
For most families, the inheritance tax never comes up. Class A covers spouses, children, grandchildren, and parents, and they pay nothing. The tax lands on transfers to siblings, nieces and nephews, friends, and unmarried partners who are not in a civil union. In New Jersey, estate planning is often about who inherits, not how large the estate is.
Source: NJ Division of Taxation — Inheritance Tax Rates.
What These Rates Mean for Businesses & High Earners
The top personal rate of 10.75% and the top BAIT rate of 10.9% sit close together. That gap is small on purpose. It is why pass-through owners look hard at the BAIT election to claw back the federal SALT deduction they would otherwise lose.
A few situations turn these rates into real dollars. Owners weighing an S-corporation or BAIT election run several years at once. Sellers of a business or a high-value home model the transfer fee and the exit-tax prepayment before closing. Founders and investors note that New Jersey does not offer the federal qualified small business stock (QSBS) exclusion — the state taxes that gain. Our QSBS and New Jersey guide covers the mismatch, and our selling a business in NJ guide covers exit planning.
Timing is the other lever. New Jersey's top brackets are flat once you pass them, so shifting income between years rarely helps at the very top. But the year you sell an asset, the year you make a BAIT election, and the structure you hold property in all change the result. These are decisions to make before the transaction, not after.
The rates on this page are the inputs. The right move depends on your full facts. Owners in these situations usually work through the numbers with a CPA before acting. If that is you, schedule a consultation or start with our tax planning service.
Frequently Asked Questions
What is New Jersey's top income tax rate in 2026?
New Jersey's top Gross Income Tax rate is 10.75%. It applies to taxable income over $1,000,000, for every filing status. That top rate has applied since January 1, 2020. The lowest bracket is 1.4%.
What is the New Jersey Corporation Business Tax rate?
The base Corporation Business Tax rate is 9% for corporations with entire net income over $100,000. Smaller corporations pay less: 7.5% between $50,001 and $100,000, and 6.5% at $50,000 or below.
What is the New Jersey Corporate Transit Fee?
The Corporate Transit Fee is a 2.5% charge on Corporation Business Tax income over $10 million. It applies to privilege periods from January 1, 2024 through December 31, 2028. It is charged on top of the regular Corporation Business Tax.
Who pays the New Jersey mansion tax now?
As of July 2025, the seller pays New Jersey's supplemental realty transfer fee, often called the mansion tax. The buyer paid it before the change. The fee is now graduated from 1% to 3.5% on home sales over $1,000,000.
What is the New Jersey BAIT rate?
New Jersey's Pass-Through Business Alternative Income Tax (BAIT) is graduated. It runs from 5.675% on the first $250,000 of distributive proceeds up to 10.9% on proceeds over $1,000,000.
Did New Jersey repeal its estate tax?
Yes. New Jersey repealed its estate tax for deaths on or after January 1, 2018. The New Jersey inheritance tax still applies. Close relatives in Class A are exempt, while other beneficiaries pay 11% to 16%.
What is the New Jersey sales tax rate in 2026?
New Jersey's Sales and Use Tax rate is 6.625%. It applies to most tangible personal property, specified digital products, and certain services, unless a specific exemption applies.
Does New Jersey tax capital gains at a lower rate?
No. New Jersey taxes capital gains as ordinary income. There is no separate, lower capital gains rate. A large gain can be taxed at the top rate of 10.75%.
Is clothing subject to New Jersey sales tax?
Most clothing and footwear are exempt from New Jersey Sales Tax. Prepared food, digital products, and many services are taxable. Exemptions have limits, so confirm a specific item before you rely on it.
Do S-corporations pay New Jersey Corporation Business Tax?
New Jersey S-corporations owe the Corporation Business Tax minimum tax, but not the full rate. Beyond that minimum, their income passes through to the owners, who report it on their New Jersey returns. Many also elect the BAIT to work around the federal SALT cap.
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