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Taxation of Employee Benefits: New Jersey

Taxation of Employee Benefits requirements for other states

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

Author: Vicki M. Lambert, The Payroll Advisor


  • Because New Jersey allows only a limited exclusion for certain types of cafeteria plans, the value of cafeteria plan benefits is typically subject to state income tax withholding. The state income tax treatment of contributions to a qualified § 401(k) plan follows federal law. See Salary Deferrals to § 125 Cafeteria Plans and § 401(k) Plans.
  • In New Jersey, same-sex marriage is legal and civil unions and domestic partnerships are recognized. The value of health insurance benefits provided to an employee's same-sex spouse or same-sex civil union partner or domestic partner is not taxable. See Same-Sex Couple Health Insurance Benefits.