New Jersey’s top marginal individual income tax rate remains at 10.75% for 2026, placing it as the fourth highest in the United States, according to a new analysis from the Tax Foundation, an independent policy research group based in Washington, D.C.
Only California (13.3%), Hawaii (11%), and New York (10.9%) have higher top rates than New Jersey. The District of Columbia ties with New Jersey for fourth place, while Oregon and Minnesota follow with rates of 9.9% and 9.85%, respectively.
California also imposes an additional payroll tax of 1.1% on wage income, which brings its total top rate to 14.4% as of 2024.
Out of all U.S. states and the District of Columbia, forty-three levy individual income taxes and forty-one tax wage and salary income specifically. New Hampshire taxes only dividend and interest income, while Washington applies its tax solely to capital gains.
Seven states—Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, and Wyoming—do not collect any individual income tax.
Among states that do tax wages, eleven use a single-rate structure that applies one rate to all taxable income. Others—including New Jersey—have graduated-rate systems with multiple brackets; in several states such as California, Massachusetts, New Jersey, New York and D.C., the highest bracket starts at $1 million or more in taxable income.
In 2025 alone, six states reduced their individual income tax rates: Mississippi, Iowa, Louisiana, Missouri, Nebraska and New Hampshire.
Three states saw notable changes in their personal income taxes:
– Maryland implemented retroactive increases for high earners starting January 1st: a 6.25% rate on incomes over $500,000; a 6.5% rate above $1 million; plus a new 2% capital gains surcharge for individuals whose federal adjusted gross income exceeds $350,000.
– Washington began taxing capital gains above $1 million at a rate of 2.9%.
– Massachusetts kept most personal income taxed at 5%, but increased certain capital gains taxes to an 8.5% rate.
The New Jersey Business and Industry Association is recognized as the largest statewide employer association in the country and represents private-sector employers across various industries throughout New Jersey from its base in Trenton. The association supports business competitiveness by providing advocacy services along with practical information designed to help members succeed financially through essential resources and cost-saving benefits while also facilitating partnerships among businesses as well as between government agencies and academic institutions.
