Withholding Taxes: New Jersey

Federal law and guidance on this subject should be reviewed together with this section.

Author: Vicki M. Lambert, The Payroll Advisor

Summary

• Income tax withholding in New Jersey depends on whether an employee is a resident or nonresident of the state. New Jersey has entered into a reciprocal income tax agreement with Pennsylvania. Expatriates of New Jersey are subject to withholding on their worldwide income. See Withholding on Residents, Nonresidents and Expatriates.
• New Jersey employers must provide state Form NJ-W4, Employee's Withholding Allowance Certificate, to employees and withhold New Jersey income tax at the rate selected by the employees. See Employee Withholding Forms.
• The method of withholding on supplemental wages, such as bonuses, commissions, overtime pay, sales awards, tips, etc. depends on whether they are paid at the same time as regular wages or separately. See Supplemental Wages.
• Employers must provide all employees with a federal Form W-2, Wage and Tax Statement, for a calendar year, and any corrected statements made for that year, no later than February 15 following the end of the year. See Form W-2 Requirements.
• All public and private employers are required to give written notice to potentially eligible employees of the availability of both the federal and New Jersey earned income tax credits when they give employees their annual federal Forms W-2, Wage and Tax Statement. See Earned Income Tax Credit Notices.
• Localities including Jersey City and Newark have requirements pertaining to withholding taxes. See Local Requirements.