>Here are some basic facts on New Jersey’s tax system and how it compares to other states:
Tax Freedom Day Arrives on April 25 in New Jersey
Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2010, New Jersey taxpayers work until April 25 to pay their total tax bill, ranking them 2nd highest in the nation. This is 16 days later than national Tax Freedom Day (April 9). The Tax Freedom Days of the neighboring states are: New York, April 23 (ranked 3rd nationally), Pennsylvania, April 13 (ranked 11th nationally), and Delaware, April 10 (ranked 18th nationally).
Full study of Tax Freedom Day, nationwide and in each state
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New Jersey’s State/Local Tax Burden Highest in Nation
Estimated at 11.8% of income, New Jersey’s state/local tax burden percentage is the highest in the country, well above the national average of 9.7%. New Jersey taxpayers pay $6,610 per capita in state and local taxes.
New Jersey’s State-Local Tax Burden, 1977-Present
Other States’ State/Local Tax Burdens
Historical Chart Comparing All States’ State/Local Tax Burdens from 1977 to 2008
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New Jersey’s 2010 Business Tax Climate Ranks 50th
New Jersey ranks 50th in the Tax Foundation’s State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. Neighboring states ranked as follows: New York (49th), Pennsylvania (27th) and Delaware (8th).
50-State Comparison of Business Tax Climates (data only)
2009 State Business Tax Climate Index, Sixth Edition (full study)
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New Jersey’s Individual Income Tax System
New Jersey’s personal income tax system consists of six brackets and a top rate of 8.97% kicking in at an income level of $500,000. Among states levying personal income taxes, New Jersey’s top rate ranks 6th highest nationally. New Jersey’s 2008 state-level individual income tax collections were $1,457 per person, which ranked 6th highest nationally.
50-State Table of Individual Income Tax Rates
50-State Table of State Individual Income Tax Collections
50-State Table of State and Local Individual Income Tax Collections Per Capita
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New Jersey’s Corporate Income Tax System
New Jersey’s corporate tax structure consists of a flat 9% on corporate income. However, corporations with total net income of $100,000 or less pay 7.5% and corporations with total net income of $50,000 or under pay 6.5%. Among states levying corporate income taxes, New Jersey’s top tax rate ranks 5th highest nationally. In 2008, state-level corporate tax collections (excluding local taxes) were $326 per capita, ranking the state 5th highest nationally.
50-State Table of Corporate Income Tax Rates, 2000-2009
50-State Table of State and Local Corporate Income Tax Collections Per Capita and Per Household, 2005
50-State Table of State Corporate Income Tax Collections Per Capita, 2006
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New Jersey Sales and Excise Taxes
New Jersey levies a 7% general sales or use tax on consumers, which is above the national median of 5.85%. In 2007 combined state and local general and selective sales tax collections were $1,424 per person, ranking 22nd highest nationally. New Jersey’s gasoline tax stands at 14.5 cents per gallon and ranks 47th highest nationally. New Jersey’s cigarette tax stands at $2.70 per pack of twenty, which is the 5th highest cigarette tax in the nation. The sales tax was adopted in 1966, the gasoline tax in 1927 and the cigarette tax in 1948.
50-state table of sales, cigarette, gas, beer, wine, and spirits tax rates.
50-State Table of State and Local General and Selective Sales Tax Collections Per Capita
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New Jersey Property Taxes: Highest Per Capita in the Nation
New Jersey is one of the 37 states that collect property taxes at both the state and local levels. As in most states, local governments collect far more. New Jersey’s localities collected $2,372.03 per capita in property taxes in fiscal year 2006, which is the latest year the Census Bureau published state-by-state property tax collections. At the state level, New Jersey collected $0.40 in property taxes during FY 2006, making its combined state/local property taxes $2,372.43 per capita, New Jersey’s combined per capita collections were the highest in the nation.
State property tax collections per capita by state
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Federal Tax Burdens and Expenditures: New Jersey is a Donor State
New Jersey taxpayers receive less federal funding per dollar of federal taxes paid than any other state. Per dollar of federal tax paid in 2005, New Jersey citizens received approximately $0.61 in the way of federal spending. This represents a decline from 1995 when New Jersey received $0.68 per dollar of taxes in federal spending (second lowest). Neighboring states and the amount of federal spending they received per dollar of federal taxation paid were as follows: New York ($0.79), Pennsylvania ($1.07), and Delaware ($0.77).
Comparing the amount of federal taxes sent to Washington with the amount of federal spending coming back to the state
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