The Tax Foundation recently conducted a a study of the tax climates in each of the fifty states and then rated and ranked them based on five categories: corporate tax, individual income, sales tax, unemployment insurance tax, and property tax. The Tax Foundation’s rankings are designed to show how well state tax systems are structured, rather than simply rank the states by the amount of taxes assessed.
New Jersey finished dead last in overall tax climate and it ranked in the individual tax categories as follows: 42 (corporate tax), 48 (individual income tax), 45 (sales tax), 25 (unemployment insurance tax), and 50 (property tax).
New Jersey residents are faced with some of the highest property tax burdens in the country. It is also one of just two states to levy both an inheritance tax and an estate tax, and has one of the most strangely-structured individual income taxes in the country.
New Jersey’s highest rate for taxing income is 8.97%, which is even higher than New York’s highest rate. New Jersey has six tax brackets for individual income tax:
- Income in an amount more than $0 but less than $20,000 is taxed at a rate of 1.40%.
- Income in an amount more than $20,000 but less than $35,000 is taxed at a rate of 1.75%.
- Income in an amount more than $35,000 but less than $40,000 is taxed at a rate of 3.50%.
- Income in an amount more than $40,000 but less than $75,000 is taxed at a rate of 5.53%.
- Income in an amount more than $75,000 but less than $500,000 is taxed at a rate of 6.37%.
- The top individual income tax rate is 8.97% for income over $500,000.
New Jersey collects $1,359 in state and local individual income tax per capita which ranks eighth nationally. As to state local tax burdens, residents of New Jersey have the second-highest burden, with 12.2 percent of their income expended for state and local taxes, exceeded only by Connecticut (12.6 percent) and New York (12.7 percent).
It is wise for both individual and business taxpayers located in New Jersey to consult with a tax professional to help assess their current tax situation, looking ahead to the future. If you have any question about taxes, especially in planning ahead for the next filing season, call THE TAX EXPERTS at the Thorgood Law Firm www.thorgoodlaw.com. For a FREE consultation call 212-490-0704.
