New York vs New Jersey Taxes
Compare the total tax burden between New York (4% – 10.9%) and New Jersey (1.4% – 10.75%). Enter your income to see which state saves you more.
New York vs New Jersey: High-tax neighbors with surprising differences
New York and New Jersey are often lumped together as "high-tax Northeastern states," but the details reveal meaningful differences that affect millions of commuters and residents across the metro area. New York's top income tax rate reaches 10.9% at the state level, with an additional city income tax of up to 3.876% for New York City residents. New Jersey's top rate is 10.75%, but only on income exceeding $1 million—for most earners, effective rates are lower than New York's.
The cross-Hudson dynamic creates a unique tax planning situation. Many workers commute between the two states, and the tax implications depend on where you live versus where you work. New York taxes nonresidents on income earned in the state, so a New Jersey resident working in Manhattan pays New York tax on that income—but receives a credit on their New Jersey return to avoid full double taxation. The net effect is that you typically pay the higher of the two states' rates.
Property tax is where New Jersey clearly loses. At an effective rate of 2.23%, New Jersey has the highest property taxes in America—significantly above New York's statewide average of 1.40%. A home assessed at $500,000 costs roughly $11,150 per year in New Jersey property taxes versus $7,000 in a typical New York suburb. For families prioritizing school quality and suburban living, this property tax gap often outweighs the income tax differences.
Key Differences Beyond Income Tax
| Category | New York | New Jersey |
|---|---|---|
| Property Tax | Statewide effective rate ~1.40%; varies widely (NYC lower, Westchester/Long Island higher) | Highest in the nation at ~2.23%; median annual bill exceeds $9,000 |
| Income Tax Structure | Progressive 4%-10.9% with 9 brackets; NYC adds 3.078%-3.876% | Progressive 1.4%-10.75% with 7 brackets; top rate only on income above $1M |
| Sales Tax | Base 4%, up to 8.875% in NYC; clothing under $110 exempt in NYC | Flat 6.625% statewide; all clothing exempt; no local additions |
| Commuter Tax Implications | Taxes nonresidents on NY-source income; NYC tax applies only to city residents | Gives credit for taxes paid to other states; net effect is paying the higher state's rate |
| Estate and Inheritance Tax | Estate tax with $6.94M exemption (cliff provision); no inheritance tax | Estate tax with $0 exemption (all estates taxed); PLUS separate inheritance tax on beneficiaries |
Who Benefits from Moving?
NYC renters considering suburban homeownership
If you're leaving Manhattan for the suburbs, compare Westchester/Long Island (NY) versus Bergen/Morris County (NJ). New Jersey's property taxes are $3,000-$6,000 higher per year on comparable homes, but you avoid NYC's city income tax—run the numbers for your specific income level.
High earners choosing where to establish residency
For someone earning $500K who works in Manhattan, living in NJ versus NYC can save $15,000+ in city income tax annually. The higher NJ property taxes offset only part of this. NJ wins for high earners who work in NYC.
Families focused on estate planning
New Jersey's $0 estate tax exemption plus its separate inheritance tax make it significantly worse than New York for wealth transfer. High-net-worth families should factor this heavily into their residency decision.
Bottom line: For NYC workers choosing between the two states, New Jersey often wins on income tax (no city tax) but loses badly on property tax. The break-even depends on income level and home value.
Tax at Different Income Levels
| Income | New York Total Tax | New Jersey Total Tax | Annual Savings |
|---|---|---|---|
| $75,000 | $16,939 | $15,468 | Save $1,471 |
| $100,000 | $25,828 | $24,339 | Save $1,489 |
| $150,000 | $44,396 | $42,967 | Save $1,429 |
| $200,000 | $61,865 | $60,496 | Save $1,369 |
Based on single filer, standard deduction, 2025 tax year. Includes federal income tax, state income tax, and FICA.
Why the difference
You'd save $1,489/year ($124/month) in New Jersey vs New York.
Tax structure
New York uses progressive brackets up to 10.9%, while New Jersey uses progressive brackets up to 10.8%.
Effective rate at your income
At $100,000, New Jersey's effective state rate is 3.2% vs 4.7% in New York — a 1.5 percentage point gap.
New York local taxes
New York City residents pay an additional 3.1-3.9% city income tax on top of state tax.
Tip: If you work in NYC, the city income tax significantly increases your burden. Living outside the city (e.g., New Jersey, Connecticut, or Westchester) can save 3-4% on city tax, but commuter taxes and higher property taxes may partially offset the savings.
Tip: New Jersey's combination of high income tax and nation-leading property taxes creates a substantial tax burden. If you work in NYC, note that NJ residents receive a credit for taxes paid to NY, but the NJ/NYC tax interaction can be complex — ensure proper credit on your NJ return.
Understanding Each State
New York
New York's state income tax has progressive brackets reaching 10.9%. New York City residents pay an additional city income tax of 3.078-3.876%, making the combined state+city marginal rate up to 14.776% — the highest combined rate in the nation. The Yonkers surcharge adds another 16.75% of state tax for Yonkers residents.
Tip: If you work in NYC, the city income tax significantly increases your burden. Living outside the city (e.g., New Jersey, Connecticut, or Westchester) can save 3-4% on city tax, but commuter taxes and higher property taxes may partially offset the savings.
New Jersey
New Jersey has progressive income tax brackets reaching 10.75% on income over $1 million. Combined with property taxes that are the highest in the US (average 2.23% of home value), New Jersey has one of the heaviest overall tax burdens nationally. However, NJ does not tax Social Security benefits.
Tip: New Jersey's combination of high income tax and nation-leading property taxes creates a substantial tax burden. If you work in NYC, note that NJ residents receive a credit for taxes paid to NY, but the NJ/NYC tax interaction can be complex — ensure proper credit on your NJ return.
Key Comparison Points
Income tax structure: New York has a progressive income tax (4% – 10.9%), while New Jersey has a progressive income tax (1.4% – 10.75%).
Beyond income tax: State tax comparisons should also consider property tax rates, sales tax, and cost of living. A state with no income tax may have higher property or sales taxes that offset the savings.
SALT deduction cap: Under OBBBA (2025+), the federal SALT cap is $40,000, phasing out above $500,000 MAGI toward a $10,000 floor. This limits the federal tax benefit of living in a high-tax state, so the gross state tax difference remains close to the net difference for most earners — especially high earners inside the phaseout.
Frequently asked questions
Is it cheaper to live in New York or New Jersey?
Based on income tax alone, New Jersey has a lower tax burden. At $100K income, you'd save $1,489 annually in New Jersey compared to New York. However, total cost of living also depends on property taxes, sales taxes, and housing costs.
How much would I save moving from New York to New Jersey?
A single filer earning $100,000 would save approximately $1,489 per year in total taxes by living in New Jersey instead of New York. At $150,000 income, the savings change to $1,429 per year.
What is the income tax rate in New York?
New York has a progressive income tax with rates of 4% – 10.9%.
What is the income tax rate in New Jersey?
New Jersey has a progressive income tax with rates of 1.4% – 10.75%.