NJ State Income Tax Rate 2021

2021 Tax Highlights

We have summarized the major changes, as of this date, which will affect your payroll tax calculations effective January 1, 2021. Check our website, www.hfco.com, for periodic updates.

Federal Income Tax (Individual)

The federal individual tax rates remain the same for 2021. Some of the tax bracket amounts have changed slightly after inflation adjustments. (See schedule 1 for tax brackets, rates, and standard deductions)

New Jersey Individual Tax

New Jersey individual income tax rates remain largely the same for 2021 except for those making $1-$5 million. Retroactive to January 1, 2020, the tax rate on that income bracket increased from 8.97% to 10.75%, regardless of filing status. Income over $5 million is already subject to this rate. (See schedule 2 for tax brackets and rates)

Social Security Tax

The social security wage base for 2021 will increase to $142,800.

Social Security Tax is broken into two sections, Social Security and Medicare. The following is each section’s rate and base for 2021:

Social SecurityMedicare
Rate – Employer6.2%1.45%
Rate – Employee6.2%1.45%
Base$142,800Unlimited
Maximum Employer Portion$8,853.60Unlimited
Maximum Employee Portion$8,853.60Unlimited

An employer must withhold additional Medicare tax from wages it pays to an individual in excess of $200,000 in a calendar year, without regard to the individual’s filing status or wages paid by another employer. The rate on the additional Medicare Tax is 0.9% and is only paid by the employee. This information is subject to change based on the policies of the new federal administration.

NJ employers who need to file less than 100 forms can get help from a manual system that will allow them to fill out each form by entering the information for each employee. If you are an employer and need to file 100 or more forms (Forms W-2), you can use your account with the state’s MFT/Axway system if you have one.

Federal Unemployment Tax

The FUTA tax rate decreased to 6.0% beginning July 1, 2011. The maximum state credit is 5.4% for a net tax of 0.6% (.006) on the first $7,000 of wages per employee. New Jersey’s maximum state credit is 5.4% for a net tax of 0.6% (.006) for 2021.

New Jersey Unemployment

The maximum taxable wages for New Jersey Unemployment and Workforce Development will increase to $36,200 per employee. The taxable wage base for Disability and Family Leave insurance will increase to $138,200 per employee. The taxable wage base for employer-paid disability will increase to $36,200 per employee. The employee percentage for January 1, 2021, to December 31, 2021, is divided as follows:

Tax RateMaximum Tax
Unemployment0.3825%$138.47
Workforce Development0.0425%$15.39
Disability0.4700%$649.54
Family Leave Insurance0.2800%$386.96
Maximum Employee Portion1.1750%$1,190.36

The employer rate varies and is adjusted on July 1st of each year. The base week amount increases to $220 for 2021.

401(k) Limits

The maximum employee contributions remain at $19,500 for 2021. Please note that this contribution is limited to the lesser of $19,500 or the percentage of wages specified in your 401(k) Plan document. The maximum employee contributions for employees age 50 or older remain at $26,000 for 2020. The contribution is limited to the lesser of $26,000 or the percentage of wages specified in your 401(k) Plan document.

QuickBooks

Please note that if you have payroll with QuickBooks and you keep current with all the payroll updates, QuickBooks makes the changes automatically; however, double-checking with the rates here is encouraged.

Affordable Care Act (ACA)

In 2016 the federal government required the filing of new forms relating to the Affordable Care Act. Forms: 1094B and 1095B, and forms 1094C and 1095C must be completed by employers with 50 or more full-time employees or equivalent. If you are required to file these forms and need help, please contact one of us directly.

NJ State Income Tax Rate 2020

2020 Tax Highlights

We have summarized the major changes, as of this date, which will affect your payroll tax calculations effective January 1, 2020. 

Federal Income Tax (Individual)

The federal individual tax rates remain the same for 2020. Some of the tax bracket amounts have changed slightly after inflation adjustments. (See schedule 1 for tax brackets, rates and standard deductions)

New Jersey Individual Tax

New Jersey individual income tax rates are unchanged for 2019. The tax rates start at 1.4% with a graduating tax schedule rising to a maximum tax rate of 10.75%. (See schedule 2 for tax brackets and rates)

Social Security Tax

The social security wage base for 2020 will increase to $137,700.

Social Security Tax is broken into two sections, Social Security and Medicare. The following is each section’s rate and base for 2019:

Social SecurityMedicare
Rate – Employer6.2%1.45%
Rate – Employee6.2%1.45%
Base$137,700Unlimited
Maximum Employer Portion$8,537.40Unlimited
Maximum Employee Portion$8,537.40Unlimited

An employer must withhold additional Medicare tax from wages it pays to an individual in excess of $200,000 in a calendar year, without regard to the individual’s filing status or wages paid by another employer. The rate on the additional Medicare Tax is 0.9% and is only paid by the employee. This information is subject to change based on the policies of the new federal administration.

NJ employers who need to file less than 100 forms can get help from a manual system that will allow them to fill out each form by entering the information for each employee. If you are an employer and need to file 100 or more forms (Forms W-2), you can use your account with the state’s MFT/Axway system if you have one.

Federal Unemployment Tax

The FUTA tax rate decreased to 6.0% beginning July 1, 2011. The maximum state credit is 5.4% for a net tax of 0.6% (.006) on the first $7,000 of wages per employee. Pennsylvania and New Jersey’s maximum state credit is 5.4% for a net tax of 0.6% (.006) for 2020.

New Jersey Unemployment 

The maximum taxable wages for New Jersey Unemployment and Workforce Development will increase to $35,300 per employee. The taxable wage base for Disability and Family Leave insurance will increase to $134,900 per employee. The taxable wage base for employer-paid disability will increase to $35,300 per employee. The employee percentage for January 1, 2020, to December 31, 2020, is divided as follows:

Tax RateMaximum Tax
Unemployment0.3825%$135.02
Workforce Development0.0425%$15.00
Disability0.2600%$350.74
Family Leave Insurance0.1600%$215.84
Maximum Employee Portion0.8450%$716.60

The employer rate varies and is adjusted on July 1st of each year. The base week amount increases to $200 for 2020.

401(k) Limits

The maximum employee contributions increased to $19,500 for 2020. Note that this contribution is limited to the lesser of $19,500 or the percentage of wages specified in your 401(k) Plan document. The maximum employee contributions for employees age 50 or older increased to $26,000 for 2020. The contribution is limited to the lesser of $26,000 or the percentage of wages specified in your 401(k) Plan document.

QuickBooks

Please note that if you have payroll with QuickBooks and you keep current with all the payroll updates, QuickBooks makes the changes automatically; however, double-checking with the rates here is encouraged.

Minimum Hourly Wage

AmountEffective Date
Federal$7.25July 24, 2009
New Jersey$11.00January 1, 2020

Affordable Care Act (ACA)

In 2016 the federal government required the filing of new forms relating to the Affordable Care Act. Forms: 1094B and 1095B, and forms 1094C and 1095C must be completed by employers with 50 or more full-time employees or equivalent. If you are required to file these forms and need help, please contact one of us directly.

NJ State Income Tax Rate 2019

2019 Tax Highlights

We have summarized the major changes, as of this date, which will affect your payroll tax calculations effective January 1, 2019. 

Federal Income Tax (Individual)

The federal individual income tax rates changed for 2019 to reflect the Tax Cuts and Jobs Act new law. The personal exemption for 2019 was repealed.  (See schedule 1 for tax brackets, rates and standard deductions)

New Jersey Individual Tax

New Jersey individual income tax rates have been updated for 2019. The tax rates start at 1.4% with a graduating tax schedule rising to a maximum tax rate of 10.75%.  (See schedule 2 for tax brackets and rates)

Social Security Tax

The social security wage base for 2019 will increase to $132,900.

Social Security Tax is broken into two sections, Social Security and Medicare. The following is each section’s rate and base for 2019:

Social SecurityMedicare
Rate – Employer6.2%1.45%
Rate – Employee6.2%1.45%
Base$132,900Unlimited
Maximum Employer Portion$8,239.80Unlimited
Maximum Employee Portion$8,239.80Unlimited

An employer must withhold additional Medicare tax from wages it pays to an individual in excess of $200,000 in a calendar year, without regard to the individual’s filing status or wages paid by another employer. The rate on the additional Medicare Tax is 0.9% and is only paid by the employee. This information is subject to change based on the policies of the new federal administration.

Federal Unemployment Tax

The FUTA tax rate decreased to 6.0% beginning July 1, 2011. The maximum state credit is 5.4% for a net tax of 0.6% (.006) on the first $7,000 of wages per employee. Pennsylvania and New Jersey’s maximum state credit is 5.4% for a net tax of 0.6% (.006) for 2019.

New Jersey Unemployment 

The maximum taxable wages for New Jersey Unemployment and Disability will increase to $34,400 per employee. The withholding rate will decrease to 0.6750% (.006750). The employee percentage for January 1, 2019 to December 31, 2019 is divided as follows:

Tax RateMaximum Tax
Unemployment0.3825%$131.58
Workforce Development0.0425%$14.62
Disability0.1700%$58.48
Family Leave Insurance0.0800%$27.52
Maximum Employee Portion0.6750%$232.20

The employer rate varies and is adjusted on July 1st of each year. The base week amount increases to $172 for 2019.

401(k) Limits

The maximum employee contributions increased to $19,000 for 2020. Please note that this contribution is limited to the lesser of $19,000 or the percentage of wages specified in your 401(k) Plan document. The maximum employee contributions for employees age 50 or older increased to $25,000 for 2019. The contribution is limited to the lesser of $25,000 or the percentage of wages specified in your 401(k) Plan document.

QuickBooks

Please note that if you have payroll with QuickBooks and you keep current with all the payroll updates, QuickBooks makes the changes automatically; however, double-checking with the rates here is encouraged.

Minimum Hourly Wage

AmountEffective Date
Federal$7.25July 24, 2009
New Jersey$8.85January 1, 2020

Affordable Care Act (ACA)

In 2016 the federal government required the filing of new forms relating to the Affordable Care Act. These forms: 1094B, 1095B, 1094C and 1095C must be completed by employers with 50 or more full-time employees or equivalents. If you are required to file these forms and need help, please contact one of us directly.

If you have any questions, please contact:

Fred Schutz,
Director-Tax Department
P: 856-722-5300, ext. 201
E:fred.schutz@hfco.com
Teri Niedermayer
Senior Accounting Tech
P: 856-722-5300, ext. 516
E:teri.niedermayer@hfco.com
Brian Vinciguerra
Small Business Manager
P: 856-722-5300, ext. 501
E:brian.vinciguerra@hfco.com

Additional Resources

PDFs Available for download.

The information contained herein is general in nature and is based on authorities that are subject to change. It is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Haefele, Flanagan & Co., PC to the reader. This material may not be applicable to, or suitable for, the specific circumstances or needs, and may require consideration of non-tax and other tax factors. Contact Haefele, Flanagan & Co., PC prior to taking any action based upon this information. Haefele, Flanagan & Co., PC assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information obtained herein.