New Jersey

New Jersey Gross Income Tax defines its own income categories (no federal AGI); capital gains are 'Net gains or income from disposition of property'

“New Jersey does not differentiate between short-term and long-term capital gains. ... If you are a New Jersey resident, all of your capital gains, except gains from the sale of exempt obligations, are subject to tax.”

Note: NJ's Gross Income Tax enumerates its own categories rather than adopting federal AGI/taxable income; gains are the N.J.S.A. 54A:5-1(c) 'Net gains or income from disposition of property' category, taxed as ordinary income with no preferential rate and no carryforward.

New Jersey top income tax rate is 10.75% on income above $1,000,000 (TY2025)

“For taxable year 2025, the New Jersey gross income tax rates are: 1.4% on income up to $20,000; 1.75% from $20,001 to $35,000; 3.5% from $35,001 to $40,000; 5.525% from $40,001 to $75,000; 6.37% from $75,001 to $500,000; 8.97% from $500,001 to $1,000,000; and 10.75% above $1,000,000.”

Note: The 10.75% top rate was made permanent. Because NJ taxes capital gains as ordinary income and has no LT preference, the effective rate on NJ LT gains matches this schedule directly. MFJ and single use the same brackets (no doubling in NJ law). Standard deduction: none (NJ uses exemptions instead).

New Jersey year-locks capital losses: net loss dies at year-end; no carryforward, no cross-category offset

“If, in any taxable year, the taxpayer's net gains or net income from any category of income is a loss, that loss shall not be applied against or offset the income, gains, or profits from any other category of income; and shall not be carried over as a loss or deduction in any subsequent taxable year.”

Note: This is the strictest capital-loss rule in the country. NJ losses cannot offset NJ wages, interest, rents, or any other NJ income category and cannot carry forward even one year. Harvest strategy: realize NJ gains and losses in the same year; a net-loss year is a total wipe. No $3,000 deduction; no indefinite carryforward.

New Jersey year-locks capital losses: net loss dies at year-end; no carryforward, no cross-category offset

“If, in any taxable year, the taxpayer's net gains or net income from any category of income is a loss, that loss shall not be applied against or offset the income, gains, or profits from any other category of income; and shall not be carried over as a loss or deduction in any subsequent taxable year.”

Note: This is the strictest capital-loss rule in the country. NJ losses cannot offset NJ wages, interest, rents, or any other NJ income category and cannot carry forward even one year. Harvest strategy: realize NJ gains and losses in the same year; a net-loss year is a total wipe. No $3,000 deduction; no indefinite carryforward.

NJ exempts NJ-issued bonds; out-of-state muni bond interest is taxable gross income per N.J.S.A. 54A:5-1(e)

“Interest and gains from government debt obligations (such as bonds) of the State of New Jersey or its political subdivisions...is exempt from tax. Interest and gains you receive from debt obligations of other states and local governments are taxed by New Jersey.”

Note: GIT-5 plain-language description of N.J.S.A. 54A:6-14 (NJ bond exemption) and N.J.S.A. 54A:5-1(e) (out-of-state bond interest as NJ gross income).

NJ exempts NJ-issued bonds; out-of-state muni bond interest is taxable gross income per N.J.S.A. 54A:5-1(e)

“Interest and gains from government debt obligations (such as bonds) of the State of New Jersey or its political subdivisions...is exempt from tax. Interest and gains you receive from debt obligations of other states and local governments are taxed by New Jersey.”

Note: GIT-5 plain-language description of N.J.S.A. 54A:6-14 (NJ bond exemption) and N.J.S.A. 54A:5-1(e) (out-of-state bond interest as NJ gross income).

New Jersey conforms to IRC §1400Z-2 QOZ gain deferral via its basis/accounting-method statutes

“New Jersey follows IRC section 1400Z-2 in the deferral of capital gains because, pursuant to N.J.S.A. 54A:8-3(c) and N.J.S.A. 54A:5-1(c), the method of accounting and the basis of property must be the same as for federal income tax purposes. New Jersey also follows the special rule for investments held for at least 10 years in IRC 1400Z-2(c).”

Note: Verified live against nj.gov. The earlier 'non-conforms (structural inference)' encoding was wrong: NJ reaches §1400Z-2 conformity through its basis and accounting-method statutes, not a direct IRC incorporation. The gain is taxed only when recognized federally.

New Jersey enacts partial QSBS conformity (IRC §1202) for gains realized on or after January 1, 2026

“1. Notwithstanding any law or regulation to the contrary, gross income shall not include net gains or income derived from the sale, exchange, or other disposition of qualified small business stock to the extent such gains or income are exempt from federal taxation pursuant to section 1202 of the federal Internal Revenue Code of 1986 (26 U.S.C. s.1202). 2. This act shall take effect immediately and shall apply to taxable years beginning on or after the January 1 next following the date of enactment. Approved June 30, 2025.”

Note: Codified as C.54A:6-34; approved June 30, 2025, so it applies to taxable years beginning on or after January 1, 2026 (TY2026). Pre-2026 QSBS gains remain fully taxable in New Jersey; 2026-and-later gains track the federal §1202 exclusion.

New Jersey enacts partial QSBS conformity (IRC §1202) for gains realized on or after January 1, 2026

“1. Notwithstanding any law or regulation to the contrary, gross income shall not include net gains or income derived from the sale, exchange, or other disposition of qualified small business stock to the extent such gains or income are exempt from federal taxation pursuant to section 1202 of the federal Internal Revenue Code of 1986 (26 U.S.C. s.1202). 2. This act shall take effect immediately and shall apply to taxable years beginning on or after the January 1 next following the date of enactment. Approved June 30, 2025.”

Note: Codified as C.54A:6-34; approved June 30, 2025, so it applies to taxable years beginning on or after January 1, 2026 (TY2026). Pre-2026 QSBS gains remain fully taxable in New Jersey; 2026-and-later gains track the federal §1202 exclusion.

NJ taxes FNMA and FHLMC bond interest: GIT-5 lists both as taxable (T) for interest and capital gains

“Federal Home Loan Mortgage Corporation T T ... Federal National Mortgage Association (Fannie Mae): Guaranteed Participation Certification T T; Interest on Bonds and Debentures T T”

Note: In NJ GIT-5 the two columns are Interest and Capital Gain and 'T' marks the income taxable ('E' exempt). Freddie Mac (FHLMC) and Fannie Mae (FNMA) obligations show 'T' in both columns, so their interest and gains are fully taxable for New Jersey gross income tax. Federal Home Loan Bank obligations, by contrast, are listed 'E' (exempt).

New Jersey top income tax rate is 10.75% on income above $1,000,000 (TY2025)

“For taxable year 2025, the New Jersey gross income tax rates are: 1.4% on income up to $20,000; 1.75% from $20,001 to $35,000; 3.5% from $35,001 to $40,000; 5.525% from $40,001 to $75,000; 6.37% from $75,001 to $500,000; 8.97% from $500,001 to $1,000,000; and 10.75% above $1,000,000.”

Note: The 10.75% top rate was made permanent. Because NJ taxes capital gains as ordinary income and has no LT preference, the effective rate on NJ LT gains matches this schedule directly. MFJ and single use the same brackets (no doubling in NJ law). Standard deduction: none (NJ uses exemptions instead).

U.S. Treasury interest exempt from New Jersey income tax: 31 U.S.C. §3124(a) prohibits state taxation of U.S. government obligations

“Stocks and obligations of the United States Government are exempt from taxation by a State or political subdivision of a State. The exemption applies to each form of taxation that would require the obligation, the interest on the obligation, or both, to be considered in computing a tax.”

Note: 31 U.S.C. §3124(a) preempts state income taxation of U.S. government obligations. Covers T-bills, T-notes, T-bonds, TIPS, and I-bonds. Most states allow a deduction or subtraction by statute cross-referencing this federal preemption.

FHLB and FFCB bond interest exempt from New Jersey income tax: federal enabling statutes mandate state tax exemption

“Any security issued under this chapter by a Federal home loan bank, including the stock thereof, shall be exempt from taxation, except taxes upon real estate, by any State, county, municipality, or local taxing authority.”

Note: 12 U.S.C. §1433 (FHLB) and 12 U.S.C. §2023 (FFCB/Farm Credit Act) both mandate state tax exemption for securities issued under their chapters. Contrasts with FNMA (12 U.S.C. §§1719(e), 1723a(c)) and FHLMC (12 U.S.C. §1455(a)) which have no bondholder exemption statute and whose interest is taxable by income-tax states.

Farm Credit Act: notes, bonds, debentures, and other obligations of Farm Credit Banks are instrumentalities of the United States exempt from all State, municipal, and local taxation

“The mortgages held by the Farm Credit Banks and the notes, bonds, debentures, and other obligations issued by the banks shall be considered and held to be instrumentalities of the United States and, as such, they and the income therefrom shall be exempt from all Federal, State, municipal, and local taxation, other than Federal income tax liability of the holder thereof under the Public Debt Act of 1941 (31 U.S.C. 3124).”

Note: 12 U.S.C. §2023 explicitly covers 'the income therefrom' (i.e., interest payments to bondholders), exempting it from all State and local taxation. The only carve-out is federal income tax on the holder. Parallel to 12 U.S.C. §1433 (FHLB Act), which exempts FHLB securities from state taxation. Together §1433 and §2023 mandate state and local tax exemption for both FHLB and FFCB bond interest. Shared across all jurisdictions: a single object reference satisfies buildCitationIndex() identity check.

New Jersey top income tax rate is 10.75% on income above $1,000,000 (TY2025)

“For taxable year 2025, the New Jersey gross income tax rates are: 1.4% on income up to $20,000; 1.75% from $20,001 to $35,000; 3.5% from $35,001 to $40,000; 5.525% from $40,001 to $75,000; 6.37% from $75,001 to $500,000; 8.97% from $500,001 to $1,000,000; and 10.75% above $1,000,000.”

Note: The 10.75% top rate was made permanent. Because NJ taxes capital gains as ordinary income and has no LT preference, the effective rate on NJ LT gains matches this schedule directly. MFJ and single use the same brackets (no doubling in NJ law). Standard deduction: none (NJ uses exemptions instead).

New Jersey inheritance tax: Class A (children, parents, spouses) fully exempt; Class C and D taxed at graduated rates based on amount received and beneficiary relationship (TY2025)

“Rates depend on the amount received and the relationship between the decedent and the beneficiary or transferee.”

Note: NJ eliminated its estate tax in 2018; only the inheritance tax remains. Class A (parent, grandparent, spouse, domestic partner, child, stepchild, grandchild): fully exempt. Class C (sibling, son/daughter-in-law): first $25,000 exempt; 11% on $25K-$1.1M; 13% on $1.1M-$1.4M; 14% on $1.4M-$1.7M; 16% over $1.7M. Class D (all others not in A, C, or E): 15% on first $700,000; 16% over $700,000. Class E (charitable orgs, NJ/federal government): exempt.

New Jersey top income tax rate is 10.75% on income above $1,000,000 (TY2025)

“For taxable year 2025, the New Jersey gross income tax rates are: 1.4% on income up to $20,000; 1.75% from $20,001 to $35,000; 3.5% from $35,001 to $40,000; 5.525% from $40,001 to $75,000; 6.37% from $75,001 to $500,000; 8.97% from $500,001 to $1,000,000; and 10.75% above $1,000,000.”

Note: The 10.75% top rate was made permanent. Because NJ taxes capital gains as ordinary income and has no LT preference, the effective rate on NJ LT gains matches this schedule directly. MFJ and single use the same brackets (no doubling in NJ law). Standard deduction: none (NJ uses exemptions instead).

New Jersey year-locks capital losses: net loss dies at year-end; no carryforward, no cross-category offset

“If, in any taxable year, the taxpayer's net gains or net income from any category of income is a loss, that loss shall not be applied against or offset the income, gains, or profits from any other category of income; and shall not be carried over as a loss or deduction in any subsequent taxable year.”

Note: This is the strictest capital-loss rule in the country. NJ losses cannot offset NJ wages, interest, rents, or any other NJ income category and cannot carry forward even one year. Harvest strategy: realize NJ gains and losses in the same year; a net-loss year is a total wipe. No $3,000 deduction; no indefinite carryforward.

New Jersey Business Alternative Income Tax (BAIT): graduated 5.675% to 10.9% (top bracket over $1,000,000)

“Taxable Income: $0-$250,000 at 5.675%; $250,001-$1,000,000 at 6.52%; Over $1,000,000 at 10.9%”

Note: SALT-cap workaround: the Pass-Through Business Alternative Income Tax (BAIT) is an annual election by a partnership or S corporation on its distributive proceeds. Confidence medium: Division of Taxation BAIT page; the session law text was not fetchable during verification.

New Jersey Business Alternative Income Tax (BAIT): graduated 5.675% to 10.9% (top bracket over $1,000,000)

“Taxable Income: $0-$250,000 at 5.675%; $250,001-$1,000,000 at 6.52%; Over $1,000,000 at 10.9%”

Note: SALT-cap workaround: the Pass-Through Business Alternative Income Tax (BAIT) is an annual election by a partnership or S corporation on its distributive proceeds. Confidence medium: Division of Taxation BAIT page; the session law text was not fetchable during verification.

New Jersey BAIT: members receive a refundable gross income tax credit for their share of the entity-level tax

“Each member receives a share of BAIT paid by the entity on their share of distributive proceeds. Credits are refundable”

Note: Full credit: the member's credit equals the member's share of the BAIT the entity paid, and unused credit is refundable. Confidence medium: Division of Taxation BAIT page.