What Is the NJ Workforce Development (WFD) Tax?
Understand the New Jersey Workforce Development Tax. Learn its purpose, calculation, and compliance essentials for employers funding state skill initiatives.
The New Jersey Workforce Development (WFD) Tax is a state-mandated payroll tax designed to foster economic growth and enhance the skills of the state’s labor force. It funds initiatives that improve employment opportunities and strengthen New Jersey’s economy.
Understanding the Workforce Development Tax
The New Jersey Workforce Development Tax is a dedicated assessment on both workers and their employers in the state. This tax generates funds primarily used to support job training efforts, employment services, and initiatives that improve the skills of New Jersey’s workforce. The overarching purpose of this tax is to ensure that New Jersey’s labor force remains adaptable and highly skilled to meet evolving industry demands.
Employers are subject to this tax, as are employees, through contributions from their wages. For the purpose of this tax, “wages” encompass all forms of remuneration paid to employees, including salaries, commissions, tips, and bonuses. A specific wage base limit applies to these contributions, which for 2025 is set at $43,300. This limit means that only earnings up to this amount are subject to the Workforce Development Tax, not an employee’s entire annual income.
Worker contributions are established under state regulations, referenced in N.J.S.A. 43:21-7. This tax supports programs designed to address skills gaps and provide resources for career advancement throughout New Jersey.
Determining Your Workforce Development Tax
Calculating the New Jersey Workforce Development Tax involves applying specific rates to the taxable wage base. For 2025, the employee contribution rate for the Workforce Development Tax is 0.0425% of their taxable wages. Employers also contribute to this fund, with their rate set at 0.1175% of the same taxable wage base.
To determine the amount owed, an employer multiplies the applicable tax rate by the employee’s gross wages, up to the annual wage base limit of $43,300. For instance, if an employee earns $50,000, the tax applies only to the first $43,300 of their earnings. This calculation is performed for each employee.
Employer Compliance and Reporting
Employers in New Jersey must adhere to specific procedures for reporting and remitting Workforce Development Tax contributions. Businesses are generally required to register with the New Jersey Division of Revenue and Enterprise Services, which typically covers both unemployment and withholding tax accounts. An employer is considered subject to these requirements once they employ one or more individuals and pay wages of $1,000 or more within a calendar year.
Quarterly reporting is a standard requirement for the Workforce Development Tax, aligning with other state payroll taxes. Employers must submit Form NJ-927, the Employer’s Quarterly Report, which details the contributions due for unemployment, temporary disability, and workforce development. Additionally, employers are required to file Form WR-30, the Employer Report of Wages Paid, which provides detailed wage information for each employee.
Electronic submission is mandated for these forms and payments, typically through online portals such as NJ EDGES or the New Jersey Business Gateway Services. Annual reconciliation is also required using Form NJ-W3, which summarizes the total gross income tax withheld for the calendar year. Adhering to these reporting schedules and electronic submission methods ensures proper compliance with state regulations.
How Workforce Development Funds Support New Jersey
Funds collected through the Workforce Development Tax are strategically invested to enhance New Jersey’s economic landscape. These resources support a range of programs designed to equip individuals with the skills needed for current and future job markets. The initiatives include job training programs, employment services, and customized training solutions for businesses.
The Workforce Development Partnership Fund, specifically, provides grants for training and retraining opportunities for qualified workers and job seekers. This includes support for adult literacy programs and the establishment of apprenticeship programs, which provide hands-on training and career pathways. The goal is to increase overall productivity, enhance the competitiveness of New Jersey businesses, and help reduce periods of unemployment by preparing individuals for in-demand careers.