State of New Jersey Tax Information
Residents in New Jersey are legally required to pay New Jersey income taxes for income earned within the state and out of the state. However, nonresidents must pay income taxes for income earned within New Jersey unless they are residents of the Commonwealth of Pennsylvania and can take advantage of the Reciprocal Personal Income Tax Agreement
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Income Tax Liabilities
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For 2010 and 2011, taxpayers owe taxes to the state of New Jersey if they earn more than $10,000 annually. Single taxpayers earning $10,000 or less do not owe income taxes. For married taxpayers filing jointly, the tax threshold is $20,000 or less; those earning more than $20,000 annually must file annual taxes. In addition to standard New Jersey income taxes, businesses within the Atlantic City district must pay a luxury sales tax.
Reciprocal Personal Income Tax Agreement
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Pennsylvania and New Jersey entered into a reciprocal tax agreement for employees working in either state. Pennsylvanians working in New Jersey are not subject to New Jersey income taxes, and vice versa. Taxpayers must complete applications with their home state to receive the benefits of the reciprocal agreement.
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Local Property Tax and Homestead Exemptions
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Each municipality or county in New Jersey is responsible for collecting real estate and personal property taxes from its residents. Property taxes vary by assessment value and by county or municipality tax rate. Local property taxes pay for financing local school districts and local governments. New Jersey provides tax exemptions for homeowners and tenants that are age 65 and older, blind or disabled to receive tax relief on their principal homes. The benefit amounts depend on taxpayers' gross incomes, but generally, taxpayers cannot earn more than $150,000 annually to qualify for benefits. Eligible recipients receive a discount off their property income taxes.
Bulk Sale Law
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In 2007, the New Jersey Legislature enacted the Bulk Sale Law, taxing the transfer or sale of bulk business assets that were not conveyed in the "ordinary course of business." Under the law, the Department of Taxation requires bulk transfer sellers and purchasers to comply with the state's notice and escrow laws to transfer bulk assets.
Miscellaneous Taxes
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In addition to property taxes, income taxes, sales and use taxes, the Department of Revenue and Division of Taxation collect various other taxes from its residents. The Spill and Compensation Control Tax requires businesses transferring hazardous substances and petroleum to pay special taxes to the New Jersey Department of Environmental Protection. The Litter Control Fee requires retail vendors producing litter-generating items to pay special litter control taxes if they earn more than $500,000 annually. Businesses may also pay Sanitary Landfill Taxes and Solid Waste Services taxes if they operate sanitary landfills accepting solid waste products.
Considerations
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Since tax laws can frequently change, do not use this information as a substitute for legal or tax advice. Seek advice through a certified accountant or tax attorney licensed to practice law in your jurisdiction.
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References
- State of New Jersey: Department of the Treasury Division of Taxation: Taxes of the State of New Jersey
- State of New Jersey: Department of the Treasury Division of Taxation: Gross Income Tax Overview
- State of New Jersey: Department of the Treasury Division of Taxation: Answers to Frequently Asked Questions
