New Jersey Hourly Paycheck and Payroll Calculator

New Jersey Hourly Paycheck Calculator

New Jersey may be forever known as a state full of partiers that love to GTL (Gym, Tan, Laundry), but it’s also one of the most complicated when it comes to payroll taxes. 

We’ve compiled this list of answers to the most popular New Jersey payroll tax questions to make it easier for you.

New Jersey payroll taxes

FAQ 1: Does New Jersey require state income tax to be withheld from paychecks?

Yes, employers will need to withhold income tax for New Jersey from employees’ paychecks. This includes most non-residents who work in New Jersey. There is an exception for Pennsylvania residents, which we will cover in FAQ #8.  

FAQ 2: How do I know how much New Jersey income tax to withhold?

Employees must fill out Form NJ-W4, Employee’s Withholding Allowance Certificate, when they are hired. 

This form lets you know their filing status, number of allowances, or whether they are exempt from withholding. You’ll use all of this information to help calculate the amount of tax to take out of your workers’ paychecks. 

Employees can also write “exempt” on Line 6 of this form to report that they fall below the minimum filing requirements. If this applies, then you will not have to withhold tax. 

With the NJ-W4 information and New Jersey’s withholding tables or tax formula, you can come up with the withholding amount.

FAQ 3: How do I file and pay this withholding tax to New Jersey?

Generally, New Jersey requires the electronic payment of payroll taxes. The most common way to pay is through their website. These can also be filed through a third-party service or by hiring a professional. 
Payment frequency is based on the amount of tax you collect. Also, every employer must electronically file quarterly payroll tax returns on Form NJ-927, Employer’s Quarterly Reports.

FAQ 4: I am going to hire new employees this year. How do I report this?

You will need to report any new hires and rehires to New Jersey Child Support Employer Services. Reporting needs to be done within the first 20 days from the hire date and can be reported on their online portal. 

FAQ 5: What is the minimum wage in New Jersey?

Here’s a table that outlines the current and upcoming minimum wage in New Jersey. 

FAQ 6: What are New Jersey’s overtime rules?

Overtime pay in New Jersey is 1.5 times the base hourly pay rate for any amount of time worked over 40 hours for a given week. More information on overtime is available at the New Jersey Department of Labor and Workforce Development.

FAQ 7: Are there any other payroll taxes that I should be aware of in New Jersey?

Be sure to not overlook New Jersey’s unemployment insurance tax, or SUTA (State Unemployment Tax). The unemployment wage base in New Jersey is $39,800 in 2022. New SUTA rates are announced each year and can be found at the New Jersey Department of Labor and Workforce Development. 
Also, there are a few New Jersey local taxes that are typically employer-paid and are based on wages earned within the city. There are Jersey City and City of Newark payroll taxes.

FAQ 8: Some of my employees live in Pennsylvania and work in New Jersey. What effect does this have on their payroll taxes?

Pennsylvania and New Jersey have a reciprocity agreement. This is in place to avoid double taxation by both states. 
Workers from Pennsylvania are the only nonresident workers not required to have New Jersey income taxes withheld. Make sure these employees complete a Form NJ-165, Employee’s Certificate of Nonresidence in New Jersey.

FAQ 9: Is there anything else I should know about New Jersey payroll laws?

• Employers are required to provide temporary disability for each employee. The cost is shared between employer and employee.
• Employers need to provide employees with up to 40 hours of paid sick leave each year. 
• Family leave insurance must be provided to qualifying workers that allows them up to 12 weeks of paid leave for certain family events. The insurance is paid by employees via paycheck deductions. 
• Workers’ Compensation requirements vary by state and this table outlines some of these requirements. If you determine that your company is required to purchase Workers’ Compensation insurance in your state, learn how to sign up for this insurance with Gusto. Sometimes, companies get a request for a workers’ comp audit—head to this article and click the workers’ comp audit reports dropdown for more information. 

Final paychecks for employees who leave are due by the next regularly scheduled pay date.

Federal payroll taxes

FAQ 10: What part of my employee’s payroll taxes is my responsibility?

Employers have two key federal income taxes they need to pay.

FICA tax

The Federal Insurance Contributions Act, or FICA tax, is made up of the Medicare tax and the Social Security tax. In 2022, the Social Security tax requires employers and employees to each contribute 6.2% of wages up to $147,000. The Medicare tax requires each to contribute 1.45% of all wages. See the IRS webpage for details, like maximum thresholds.

Federal unemployment tax (FUTA)

Like the state, the federal government also has an unemployment tax. It’s called FUTA and it’s an annual tax employers pay on the first $7,000 of each employee’s wages. The FUTA rate for 2022 is 6%, but many employers only have to pay 0.6% each year.

FAQ 11: What payroll taxes do I need to withhold from my employees’ paychecks?

There are two federal payroll taxes you will need to be aware of.  

Additional Medicare tax

You’re required to withhold the Additional Medicare tax from any employee earning more than $200,000 per year. The withholding rate is 0.9% on all wages greater than $200,000.

Federal income tax

Each employee will fill out a form called a Form W-4, Employee’s Withholding Certificate, with personal information that will allow you to determine the level of withholding. 

On this form, employees disclose how many dependents they have, filing status, and other personal items. Using this information and your employees’ pay amount along with the federal withholding tables, you can come up with the tax amount.

FAQ 12: When do I pay federal payroll taxes?

Your payment frequency is based on how much tax you owe. 

Generally, FUTA is paid annually using Form 940, Annual Federal Unemployment (FUTA) Tax Return. In certain circumstances, quarterly payments are required.

The remaining payroll taxes, FIT, FICA, and Additional Medicare are paid either monthly or semi-weekly. Also, quarterly summary reports are necessary with Form 941, Employer’s Quarterly Federal Tax Return.
If any of this information is new to you, consult with a professional accountant to ensure you’re set up correctly. They can also handle your entire payroll process to ensure you never miss a deadline and leave you with more time to run your business.