How Much Are Payroll Taxes in New Jersey?

Payroll taxes are mandatory contributions funding social insurance programs and government services. Understanding these components, especially in New Jersey, is crucial for compliance and financial management. Employers must withhold employee contributions and remit their own share to tax authorities.

Federal Payroll Tax Components

Federal payroll taxes include contributions to Social Security, Medicare, and the Federal Unemployment Tax Act (FUTA), plus federal income tax withholding. Social Security and Medicare taxes, collectively known as Federal Insurance Contributions Act (FICA) taxes, are shared between employers and employees. For 2025, both the employer and employee each contribute 6.2% of wages for Social Security, up to an annual wage base limit of $176,100. Once an employee’s cumulative wages reach this threshold, no further Social Security tax applies to earnings above that amount.

Medicare tax is split between employers and employees, each contributing 1.45% of wages. Unlike Social Security, there is no wage base limit for Medicare tax. An Additional Medicare Tax of 0.9% applies to an employee’s wages exceeding $200,000. Employers must withhold this additional tax from employee wages, but they do not match this contribution.

The Federal Unemployment Tax Act (FUTA) provides funds for unemployment compensation benefits. This tax is paid solely by employers. The standard FUTA tax rate is 6.0% on the first $7,000 of each employee’s wages paid during the year. Employers receive a credit of up to 5.4% against their FUTA tax liability for timely payments made to state unemployment insurance programs. This credit effectively reduces the net FUTA tax rate for most employers to 0.6%.

Federal income tax is withheld from employee wages. Employers withhold this tax from each paycheck based on the employee’s Form W-4 and remit these amounts to the Internal Revenue Service (IRS). This tax is not a direct employer contribution but an amount collected from the employee. The amount withheld is determined by factors such as the employee’s marital status, number of dependents, and other adjustments.

New Jersey State Payroll Tax Components

New Jersey imposes state-specific payroll taxes in addition to federal requirements. These include contributions for State Unemployment Insurance (SUI), State Disability Insurance (SDI), Family Leave Insurance (FLI), and New Jersey Gross Income Tax withholding. Employer contributions are also required for the Workforce Development Partnership (WDP) and Supplemental Workforce Fund (SWF).

New Jersey’s State Unemployment Insurance (SUI) system is funded by both employer and employee contributions. Employer SUI tax rates are determined by an experience rating system. For 2025, the employer SUI wage base is $43,300. Employees contribute to SUI at a rate of 0.425% on wages up to the same $43,300 wage base.

The State Disability Insurance (SDI) program provides benefits for non-work-related illnesses or injuries. For 2025, employees contribute to SDI at 0.23% on wages up to a taxable wage base of $165,400. Employers also contribute to SDI; new employers pay 0.5% on a $43,300 wage base, while established employers’ rates are experience-rated.

Family Leave Insurance (FLI) offers wage replacement benefits for qualifying family leave events, such as bonding with a new child or caring for a seriously ill family member. FLI is funded exclusively by employee contributions. For 2025, employees contribute 0.33% of wages up to a taxable wage base of $165,400.

New Jersey Gross Income Tax is withheld from employee wages by employers, similar to federal income tax. The amount withheld depends on the employee’s Form NJ-W4 and the state’s progressive tax rate structure. For 2025, rates range from 1.5% to 11.8%, with the highest rate applying to individuals with taxable income exceeding $1,000,000.

Employers also contribute to the Workforce Development Partnership (WDP) and Supplemental Workforce Fund (SWF). These funds support training and employment initiatives. For 2025, these employer-only contributions apply to the same $43,300 wage base as SUI. The combined rate for WDP and SWF is 0.1175%.

Determining Payroll Tax Amounts

Payroll tax amounts are calculated by applying tax rates to taxable wages, observing any wage base limits. Taxable wages are the portion of an employee’s gross earnings subject to a specific tax, which may be reduced by certain pre-tax deductions. Each federal and state payroll tax has its own defined taxable wage base.

For taxes with a wage base limit, such as Social Security and New Jersey SUI, contributions cease once an employee’s cumulative earnings reach that limit. For example, once an employee earns $176,100 in 2025, neither the employer nor the employee pays additional Social Security tax on earnings above that amount for the remainder of the year. Medicare, however, has no wage base limit, so the tax applies to all earned wages.

To determine the tax amount for a pay period, taxable wages for that period are multiplied by the respective tax rate. For instance, if an employee earns $2,000 in a pay period and their year-to-date earnings are below the Social Security wage base, both the employee and employer would each contribute $124.00 ($2,000 x 6.2%) for Social Security. Income tax withholding, both federal and state, is determined using withholding tables or formulas provided by the IRS and the New Jersey Division of Taxation, taking into account the employee’s W-4 information rather than a flat percentage.

Withholding and Paying Payroll Taxes

Employers are primarily responsible for accurately withholding and timely remitting payroll taxes to government agencies. This includes both employee and employer contributions.

Federal payment schedules depend on the employer’s total tax liability, with some remitting semi-weekly and others monthly. New Jersey state payroll taxes are remitted quarterly, though larger employers may have monthly payment obligations. Employers use electronic payment systems to submit these taxes; federal taxes are commonly paid through the Electronic Federal Tax Payment System (EFTPS), and New Jersey state taxes via the New Jersey Employer File and Payment System (NJ-EFFECT).

Beyond payments, employers must file regular reports detailing wages paid and taxes withheld and remitted. For federal taxes, employers file Form 941, Employer’s Quarterly Federal Tax Return, to report FICA taxes and withheld income tax. For New Jersey state taxes, employers file forms such as Form NJ-927, Employer’s Quarterly Report, which summarizes state unemployment, disability, family leave insurance contributions, and state income tax withholding.