Paycheck Calculator New Jersey - NJ

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New Jersey - NJ Paycheck Calculator: Hourly and Salary

New Jersey is a northeastern US state in the Mid-Atlantic region. It has the Atlantic Ocean on its south, southeast and east border, State of New York on the north and east, Delaware River and Pennsylvania on the west and the State of Delaware & Delaware Bay on its southwestern border.

This state has 11th biggest population across the nation with 9 million residents and is the fourth-smallest state by area of 8,722.58 square miles. Wherefore, it is also ranked among most densely populated area in the United States. Newark is the largest city by population, and Trenton is the Capital of New Jersey.

Despite the small area, this state packs a lot of punch. It offers outstanding natural beauty, including the stunning Kittatinny Mountains, delicious food, quitter living, 130 miles of coastline, fantastic job opportunities, and remarkable educational institutes.

Mulling over to relocate to the Garden State? Got a fantastic job offer or planned to start a new life here? Then you are in the right place. Our experts have spent several days and nights to put together this great guide that covers the following topics:

  • Things you must know before moving to New Jersey
  • State Payroll Facts
  • How to calculate Paycheck in New Jersey that would help the employees to compare several job offers in terms of take-home pay and choose the best among them. Moreover, this would also help the employers to deduce the employment cost for their business. Besides, it can also help the employers to calculate paycheck for each of their employees using our Paycheck calculator.
  • Federal and State Payroll Laws to ensure all your paycheck calculations are complying with the payroll laws.

Things You Must Know Before Moving To New Jersey

Moving from one town to town, city to city, state to state or country to country is not an easy job. It requires a lot of prior knowledge, planning, funds, and hard work to make the relocation effective and fruitful. Wherefore, if you are about to settle in New Jersey, you must know about the following factors:

Education

After Massachusetts, New Jersey has some of the best schools in the United States, according to Geographic Disparity: States with the Best (and Worst) Schools by USA Today. Moreover, it also houses some of the top universities in the nation, including Princeton University. Furthermore, The Garden State has sixth-highest public school spending and the second-highest graduation rate in the country.

Some of the top schools, colleges, and universities include Princeton University (Princeton), Rutgers University-New Brunswick (Piscataway), Princeton Public Schools (Princeton), and Millburn Township School District (Millburn).

Cost of living

Living in New Jersey would cost your extra bucks as compared to any other state, as the cost of living index here is 120 points, where the national index is far lower with 100 points. Housing is the most significant contributor to higher living costs, followed by transportation. Whereas other expenses like grocery, health, utilities, and additional costs are somewhat near to the national average.

Cost of housing

As mentioned earlier, housing is quite expensive in the garden state. The median home cost in the state is $327,800, which is significantly higher than the national median home value of $231,200. However, renting here can be affordable, with the median rental expense of single bedroom space is $1,259, and for a double bedroom is $1,545.

Outdoor activities

Whether you are single, a newly-wed couple, or a complete family, the garden state has tons of tourist destinations, parks, landmarks, and other recreational activities for everyone.

You can consider visiting great places like Atlantic City, Old Victorian Cape May, Liberty State Park, and Delaware Water Gap National Area. Moreover, you can also check out some family-friendly fun destinations like Zip San Juan, Gesa Carousel of Dreams, and Slidewaters.

New Jersey also has State Parks for fresh air, hiking, and kayaking like Barnegat Lighthouse State Park and Liberty State Park.

Weather

New Jersey has two types of climates; the south has a humid subtropical climate with humid and hot summers and cools to mild winters, whereas North has a continental climate with relatively less hot summers and frigid winters.

Business and Job Opportunities

Although the state is highly and densely populated, finding a good job won't be that easy. The NJ is ranked on 31 overall in Economy Rankings by US News & World Report and has the Unemployment rate is 4.6%, which is slightly higher than the national average. However, the state does offer some of the fastest-growing jobs in operations, nursing, home health care, and occupational therapy.

Moreover, if you are looking to start your own business, then you can go for something related to industries like Clean Energy, Life Sciences, Food, and Healthcare.

These were some of the critical factors that would play an essential role in making up your mind for relocating to New Jersey. So let's move to our main topic of Paycheck Calculation. But before that, let's have a look at the following Payroll facts:


New Jersey Payroll Facts:

  • New Jersey employees are charged with Federal Income tax, at the rate range between 0% and 37%, distributed in seven tax brackets depending on income level and filing status.
  • Both employees and employers are charged with FICA tax that comprises 12.4% of Social Security Tax and 2.9% of Medicare. The employee pays half of both taxes, and the employer funds the other half for each employee. Moreover, the employees with an annual wage of $200,000 or more also pay additional Medicare surtax of 0.9%.
  • New Jersey State also charges State Income Tax, having progressive rates ranging from 1.40% to 10.75%, distributed in seven tax brackets depending on income level and filing status.
  • Newark Residents, as well as non-residents working in Newark, have to pay local income tax of 1%.
  • The federal minimum wage for non-exempted employees is $7.25. The Federal Cash minimum wage rate is $2.13, with a maximum tip credit of $5.12.
  • The NJ State Minimum Wage rate for employees is $11, unless or otherwise exempted. The Cash Minimum Wage rate for Tipped Employees is $3.13, with a maximum tip credit of $7.87.
  • New Jersey employees are paid overtime at one and half of their regular hourly rate, for each excess hour worked after 40 hours in a workweek.
  • Unlike most of the state, The Garden State charges State Disability Insurance Tax on both employers and employees. It is charged on a first taxable earning of $35,300 (2020), where employees are charged at the rate of 3.825%, and employers pay at the rate range between 0.4% and 5.4%. However, new employers are charged at a flat rate of 2.8%.
  • New Jersey, charged State Disability Insurance Tax, where employees pay 0.26%, and employers pay 0.5%.
  • Due to the state's family-friendly policies, sick family members and parents having a new baby or adopting one would be granted Family Leave Insurance, which is funded by employees by paying 0.16% of tax.
  • Additionally, New Jersey State charges NJ Workforce Development Partnership Fund at the rate of 0425% on employees and 0.1175% on new employers.
  • New Jersey has a reciprocal agreement with Pennsylvania. Therefore, salaries/wages, along with supplemental wages and bonuses paid to Pennsylvania residents employed in New Jersey, are not subject to New Jersey income tax or vice versa.
  • Living Wage for New Jersey for a single adult is $14.03, and for a couple (one working) with two children is $29.75, according to Massachusetts Institute of Technology.
  • The Median Household income in the state is $79,363, according to the United States Census Bureau.
  • The average annual salary in NJ is $63,394, which is significantly lower than the national average of $66,025.

As we are done with relocation to New Jersey and its payroll facts, now it's time to calculate paycheck.


Step 1 - Calculating Gross Pay:

The very first step to calculating the paycheck amount is to determine Gross Pay. It is a wage that an employee earned in the last pay period.

Gross Pay is calculated differently for both hourly and salary-based employees, which is discussed in detail as follow:


Gross Pay for Hourly Employee

Hourly Employees are paid at a mutually agreed pay rate for each hour they work in a pay period. Usually Pay periods for Hourly employees are Hourly, Daily, Weekly, and Bi-Weekly. However, the Federal, State, and Local Wage law requires the employers to set the pay rate equals to or more than the defined Minimum Wage Law for the non-exempted employees.

Hourly employees are also entitled to receive overtime, for each excess hour worked after regular hours in a workday or a workweek. Remember, like Minimum wage, the employers are also required to follow Overtime wage law provided by the federal, state, and local authorities.


Note: All the relevant laws are discussed in detail ahead.

To calculate gross wage for an hourly employee:

  1. Calculate total hours worked in a Pay Period using the data from Timesheet or Timecard.
  2. Multiply Total Hours worked with the Hourly Rate (Pay Rate).
  3. Add overtime hours (if any) worked by the employee.

Quick Tip: You can also use our Timecard with overtime Calculator to calculate Gross Wage for Hourly Employee instantly.

Gross Pay for Salaried Employee

Salaried Employees are paid at the flat amount rather than on an hourly basis. The amount is usually mutually agreed as an Annual Salary, which is then paid in Semi-monthly or Monthly Pay periods.

Salaried employees are mostly exempted from overtime law. However, their salaries must be according to Federal and State Minimum Wage law.

To calculate Gross Pay for Salaried Employees:

  • Divide the "employee's salary" by "number of pay periods." For example: If the employee's annual salary is $25000 and is paid on a semi-monthly pay period, then the employee's Gross Pay would be: $25000 / 24 = $1042.

Don't forget that Supplemental Wages like Bonuses, commissions, tips, paid leaves, fringe benefits, or other taxable wages earned by the employee must be added into the Gross wages.


Step 2 – Subtracting Pre-Tax Deductions (If Any):

Once you are done with Gross Wages, it's time to subtract any Pre-Tax deductions from the gross wage to get taxable wages as Pre-tax deductions are not taxable for federal payroll taxes.

Pre-tax deductions are offered to the employees as benefits like fringe benefits, HSA plans, etc., to reduce their taxable income, hence, increasing their take-home pay amount. Remember, not all benefits are exempted from taxes, so choose the pre-tax deductions wisely.

Some of the common pre-tax deductible benefits are:

  • FSA - Flexible Spending Accounts
  • HSA - Health Savings Accounts
  • Retirement savings accounts like a traditional 401(k)
  • Some of the Fringe Benefits
  • health insurance
  • accident insurance
  • dental and vision insurance
  • Commuter Benefits
  • Short-Term Disability

Note: Pre-Tax deduction rate, contribution limits, special tax withholding rules change from year to year, according to inflation and costs of living by the federal government. Therefore, you must keep yourself updated with all rates before making any deductions.

Many Taxpayers find it hard to itemize their deductions to calculate taxable wages, for which they go for standard deductions, that varies according to the filing status, as shown in the table below:

All Filers(Updated Dec 2019)
Filing Status Standard Deduction Amount
Single Filers $12,200
Married, Filing Jointly $24,400
Married, Filing Separately $12,200
Head of Household $18,350

Step 3 – Calculate and Subtract Federal Taxes:

Once you have determined the taxable wages, it's time to deduct Federal Income taxes for the Taxable wages.

IRS requires the employers to withhold federal income tax from the employee's paycheck, according to the details provided by the employee on Form W-4. The employee fills this form at the start of the job. The form includes all the necessary information, including income, number of allowances to claim, number of dependents, amount of additional taxes to deduct, and much more.

The employees are required to keep their Form W-4 up to date with all their current information, especially marriage, divorce, or child's birth.

The federal income tax is charged according to the tax brackets in which the taxpayer's income falls. The latest income tax brackets and rates are as follow:

Single Filers
Taxable Income Rate
$0 - $9,700 10%
$9,700 - $39,475 12%
$39,475 - $84,200 22%
$84,200 - $160,725 24%
$160,725 - $204,100 32%
$204,100 - $510,300 35%
$510,300+ 37%

Married, Filing Jointly
Taxable Income Rate
$0 - $19,400 10%
$19,400 - $78,950 12%
$78,950 - $168,400 22%
$168,400 - $321,450 24%
$321,450 - $408,200 32%
$408,200 - $612,350 35%
$612,350+ 37%

Married, Filing Separately
Taxable Income Rate
$0 - $9,700 10%
$9,700 - $39,475 12%
$39,475 - $84,200 22%
$84,200 - $160,725 24%
$160,725 - $204,100 32%
$204,100 - $306,175 35%
$306,175+ 37%

Head of Household
Taxable Income Rate
$0 - $13,850 10%
$13,850 - $52,850 12%
$52,850 - $84,200 22%
$84,200 - $160,700 24%
$160,700 - $204,100 32%
$204,100 - $510,300 35%
$510,300+ 37%

Step 4 – Deduct FICA Taxes:

Besides, Federal Income Tax, the IRS also requires the employer to withhold FICA tax (15.3%) for the employee's paycheck and also requires the employer to pay an equal amount for each employee.

Federal Insurance Contributions Act (FICA) Taxes comprises of two types of taxes which are as follow:

  1. Social Security:

A total of 12.4% of social security tax is charged from which 6.2% is withheld from the employee's gross, and the employer pays the matching 6.2%. However, Social Security is only charged on the maximum taxable earnings of $137,700 for 2020.


  1. Medicare:

A total of 2.9% of Medicare is charged, from which 1.45% is withheld from the employee's gross, and the employer pays the matching 1.45%. Unlike Social Security, there is no maximum table earning limit for this tax. However, an additional surtax of 0.9% is charged as Additional Medicare Surtax on the employees having income over the specified level along with filing status, which is as follow:

Income Over Filing Status
$250,000 Married Filing Jointly
$125,000 Married Filing Separately
$200,000 Single

Note: Employers are not required to pay an equal amount for Additional Medicare Surtax.

Step 5 – Payment of FUTA Taxes

IRS requires the employer to pay another tax, known as The Federal Unemployment Tax Act (FUTA) Tax. This tax is paid at the rate of 6% on the first $7000 earned by each employee in a year. However, the IRS doesn't require the employees to contribute to it.

The employers who pay State Unemployment Insurance (SUI) tax in full and on time are given relieving FUTA tax credit of up to 5.4%, which saves a whopping 90% from FUTA Tax.


Step 6 – Subtract Post-Tax Deductions (If any):

Post-tax deductions (after-tax deductions) is an amount the employer takes out from the employee's paycheck after taxes. Therefore, it does not affect taxable wages and the amount of tax payable.

Here are some of the types of post-tax deductions that employee may voluntarily choose:

  • Charitable contributions
  • Disability insurance
  • Garnishments
  • Specific Retirement Plans like Roth 401(k)
  • Life Insurance

Step 7 – Withhold State Payroll Taxes:

As you are done with Federal Payroll Taxes, now it's time to discuss State Payroll Taxes. The Garden state levies several payroll taxes on employers and employees, which are as follow:

State Income Tax:

The New Jersey State follows a progressive income tax system, where income tax is charged on employee's paycheck at the rates, which vary depending on income level and filing status, ranging between 1.40% and 10.75%.

Employers are required to withhold this tax from the employee's paycheck according to the information provided by the employee in Form NJ-W4. Moreover, employees also needed to update all the information in the form, especially when on any of their significant life events like marriage, child's birth, or divorce.

Single Filers
New Jersey Taxable Income Rate
$0 - $20,000 1.400%
$20,000 - $35,000 1.750%
$35,000 - $40,000 3.500%
$40,000 - $75,000 5.525%
$75,000 - $500,000 6.370%
$500,000 - $5,000,000 8.970%
$5,000,000+ 10.750%

Married, Filing Jointly
New Jersey Taxable Income Rate
$0 - $20,000 1.400%
$20,000 - $50,000 1.750%
$50,000 - $70,000 2.450%
$70,000 - $80,000 3.500%
$80,000 - $150,000 5.525%
$150,000 - $500,000 6.370%
$500,000 - $5,000,000 8.970%
$5,000,000+ 10.750%

Married, Filing Separately
New Jersey Taxable Income Rate
$0 - $20,000 1.400%
$20,000 - $35,000 1.750%
$35,000 - $40,000 3.500%
$40,000 - $75,000 5.525%
$75,000 - $500,000 6.370%
$500,000 - $5,000,000 8.970%
$5,000,000+ 10.750%

Head of Household
New Jersey Taxable Income Rate
$0 - $20,000 1.400%
$20,000 - $50,000 1.750%
$50,000 - $70,000 2.450%
$70,000 - $80,000 3.500%
$80,000 - $150,000 5.525%
$150,000 - $500,000 6.370%
$500,000 - $5,000,000 8.970%
$5,000,000+ 10.750%

State Unemployment Insurance (SUI) Tax

The State Unemployment Insurance (SUI) tax in New Jersey is an employer-and-employee funded program that provides temporary income to unemployed workers who have lost their job without fault of their own.

The state requires the employers and employees to pay New Jersey State Unemployment Insurance (SUI) tax, at the rate ranging from 0.4% to 5.4% on employers and 3.825% on employees, on a first $35,300 (for 2020) earned in wages by each employee in a year. However, new employers are given relief as they only have to pay a flat rate of 2.8%.


Note: SUI Rates for New Jersey are changed every year. Therefore, you are required to keep a check on notices to make sure you have paid the right amount.

State Disability Insurance Tax:

The Garden State also charges State Disability Insurance (SDI) tax on both employers (new) and employees. This tax is charged on the first $35,300 of the taxable wage earned by each employee. The employees are charged with 0.26%, and new employers are required to pay at the rate of 0.5%.


Family Leave Insurance (FLI):

To help the families to take care of their sick family member, or new baby (biological or adopted), the state grants Family Leave Insurance, which is funded by the employees at the rate of 0.16% of tax.


NJ Workforce Development Partnership Fund:

This Tax is charged on New employers at the rate of 0.1175% and 0.0425% on employees.


Step 8 – Withhold Local Payroll Taxes:

Only Newark City charges Local Income Tax on its residents and non-residents working in the city at a flat rate of 1%.


Step 9 – Calculate Pay Check:

Now that you are done with all payroll taxes and calculated the net take-home pay of an employee, it's time to cut the paycheck. Moreover, you, as an employer, must pay your portion of FICA tax along with FUTA and SUI tax in full and on time regularly.


Federal and New Jersey State Payroll Laws:

  • The State law requires employers to pay at least twice a month (Semi-monthly Pay Frequency) on regular paydays as designated in advance by the employer. However, bona fide executive, supervisory, and other special classifications of employees can be paid less frequently, but at least once a month.
  • Employers are required to pay the State Minimum Wage rate of $11 to their employees, unless or otherwise exempted. Following are a few exemptions from this law:
    1. Small Business employers having less than six employees can pay the minimum wage rate as low as $10.30.
    2. Seasonal Employees can be paid as low as $10.30.
    3. Employees working in Agriculture can be paid $10.30
    4. Tipped Employees can be paid at least the cash minimum wage rate of $3.13, with the maximum tip credit of $7.87.
  • The FLSA and New Jersey State law requires the employers to pay their employees, unless or otherwise exempted, the overtime at one and half time of regular hourly rate for each excess hour worked after 40 hours in a workweek. The state doesn't require to pay overtime for an excess hour after 8 hours in a workday. However, the state law exempts some employees from the overtime law, including bona fide executive, administrative, and professional employees, outside salespeople, Computer systems analysts, computer programmers, software engineers, or other similarly skilled workers, along with few more.
  • The New Jersey Earned Sick Leave Law requires the employer to provide 1 hour of earned sick leave for every 30 hours worked, up to 40 hours each year to their employees.
  • The State law allows under the age of eighteen employees to acquire a thirty-minute break after five consecutive hours of work. However, the does not require employers to provide rest breaks or lunch breaks for employees of eighteen (18) years or older age.

FAQs

Answer: Following taxes are taken out of employee's paycheck while working in New Jersey:

  • Federal Income Tax: This tax is charged at the rate ranging from 0% to 37%, distributed in seven tax brackets depending on income level and filing status.
  • FICA Tax: This tax is charged by the federal, which comprises of Social Security of 6.2% and Medicare of 1.45%. If your annual income is more than $200,000, than you will be charged an Additional Medicare surtax of 0.9%.
  • State Income Tax: The state charges this tax at progressive rates ranging between 1.40% and 10.75%, distributed in seven tax brackets, depending on filing status and income level.
  • State Unemployment Insurance Tax: The state charges this tax at the rate of 3.825%.
  • State Disability Insurance Tax: The state charges this tax at 0.26%.
  • Family Leave Insurance (FLI) Tax: The state charges this tax at 0.16%.
  • NJ Workforce Development Partnership Fund: The state charges this at 0425%.

Answer: Following are the Payroll taxes in New Jersey levied on both employers and employees:

  • Federal Income Tax: This tax is charged on employees at the rate ranging from 0% to 37%, distributed in seven tax brackets depending on income level and filing status.
  • FICA Tax: This tax is charged by the federal on both employers and employees, which comprises of Social Security Tax of 12.4% (6.2% on employee, and 6.2% on employer for each employee) and Medicare Tax of 2.9% (1.45% on employee and 1.45% on employer for each employee). If the employee's annual income is more than $200,000 than the employee only will be charged an Additional Medicare surtax of 0.9%.
  • FUTA Tax: This tax is paid at the rate of 6% on the first $7000 earned by each employee in a year.
  • State Income Tax: The state charges this tax on employees at progressive rates ranging between 1.40% and 10.75%, distributed in seven tax brackets, depending on filing status and income level.
  • State Unemployment Insurance Tax: The state charges this tax on the first $35,300 for 2020 at the rate of 3.825% on employees, and Rates range from 0.4% to 5.4% on employers. However, new employers only have to pay at a flat rate of 2.8%.
  • State Disability Insurance Tax: Thistax is charged by the state Maximum 2020 Taxable Earnings of $35,300 at 0.26% on employees and 0.5% on new employers.
  • Family Leave Insurance (FLI) Tax: The state charges this tax at 0.16% on employees only.
  • NJ Workforce Development Partnership Fund: The state charges this at 0425% on employees and 0.1175% for new employers.
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