the staff of the Ridgewood blog
Ridgewood NJ, taxes in New Jersey do more than just affect your paycheck or your annual April filing — they impact nearly every facet of daily life. Whether you’re commuting on state-funded trains, relying on public schools, or filling up your tank, your tax dollars are at work. But while New Jersey ranks high in public services and education, it also ranks among the most heavily taxed states in the nation.
According to WalletHub’s 2025 rankings, New Jersey carries the 6th highest total tax burden, with 10.3% of personal income going to various state and local taxes — from property and income to gas and sales taxes.
🏡 New Jersey Property Taxes: #1 in the Nation
New Jersey’s property taxes are the highest in the U.S. In 2024, the average bill topped $10,100, supporting vital local services like public schools, libraries, and police departments.
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Effective property tax rate: 2.23%
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National average: 0.9%
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Example: A $300,000 home pays ~$6,700/year in NJ, compared to ~$2,700 nationally
This tax burden places New Jersey 49th out of 50 in tax competitiveness, just ahead of New York.
💼 Income Taxes: High Rates, No Inflation Adjustment
New Jersey’s progressive income tax ranges from 1.4% for incomes under $20,000 to 10.75% for incomes over $5 million. While the top rate is among the highest in the country, what’s more burdensome is the lack of inflation adjustment, causing “bracket creep” — where taxpayers pay more even if their purchasing power doesn’t increase.
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Bracket creep leads to stealth tax hikes over time
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Other states, like Pennsylvania and Illinois, don’t tax 401(k) withdrawals, making them more retirement-friendly
🛍️ Sales Tax: Middle of the Road, But Still Adds Up
New Jersey’s sales tax stands at 6.625%, slightly lower than some states but higher than most. Urban Enterprise Zones get a break at 3.3125%, and groceries/clothing are mostly exempt.
Still, common goods, restaurant meals, and services are fully taxed, contributing to overall cost of living.
⛽ Gas Tax: Among the Highest
As of January 2025, New Jersey drivers pay $0.449/gallon in gas taxes, ranking 8th nationally.
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Diesel: $0.519/gallon
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Based on average usage (24,000 miles/year at 25 mpg), the average annual gas tax is $431
These funds go directly to maintaining the state’s extensive road and bridge infrastructure.
🍺 ‘Sin Taxes’ and Excise Levies Add Up
New Jersey imposes various excise taxes — commonly called “sin taxes” — on items like alcohol, cannabis, tobacco, and even vaping products.
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Beer: $0.12/gal
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Liquor: $5.50/gal
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Cannabis: $1.24/oz social equity fee
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Cigarettes: $2.70/pack
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Vaping: $0.10/ml or 10% retail surcharge
There are also hidden excise taxes on utilities, water, hazardous substances, and ride-sharing.
⚰️ Inheritance Tax: One of the Few States That Still Has It
While New Jersey repealed its estate tax in 2018, it still enforces an inheritance tax of 11%–16% on amounts over $25,000 depending on your relationship to the deceased.
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Spouses, children, grandchildren: exempt
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Siblings, nieces/nephews, unrelated heirs: taxed
This makes New Jersey one of only 17 states with any form of inheritance or estate taxation.
🧾 Federal Taxes Still Apply
Like all U.S. residents, New Jerseyans pay:
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Federal Income Tax: Progressive brackets starting at 10%
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Social Security (6.2%) & Medicare (1.45%): Up to 7.65% payroll tax
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Medicare surtax: 0.9% for high earners
These taxes are matched by employers or fully paid by the self-employed.
📊 Example: Tax Burden for a $150,000 Household
Here’s a breakdown for a dual-income NJ household earning $150K annually:
| Tax Type | Amount |
|---|---|
| Federal Income Tax | $13,150 |
| FICA (Payroll Tax) | $11,475 |
| NJ Income Tax | $5,510 |
| Property Tax | $10,095 |
| Sales Tax | $2,080 |
| Gas Tax | $431 |
| Other Levies/Fees | $600 |
| Total Taxes | $43,341 |
| Effective Tax Rate | 28.9% |
⚖️ Bottom Line: High Taxes, High Services — But a Hefty Cost
New Jersey residents benefit from top-rated public schools, strong infrastructure, and access to essential services. However, the cost of those benefits is steep. With one of the highest property tax rates, no inflation adjustment on income brackets, and additional levies on fuel and consumer goods, the tax burden here hits hard — especially for middle-income families.
For those considering a move, retirement planning, or business decisions, understanding the full scope of New Jersey’s tax landscape is essential.
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I’m not really seeing the better services part of this. Show me how the education has improved in new jersey.That would be certainly an integral part of this whole situation of the payments that we make. Show me how the education has improved in New Jersey. That doesn’t exist. The roads are terrible, congested with illegal drivers without adequate insurance, stack and pack overdevelopment …
Because it’s not for you.
Is it November yet? We need Jack.
The $150,000 household example must be a mistake.
$13,150 in Federal Income taxes is a wishful 8.7% – we wish. I paid nearly $45K last year, and did not earn $150,000