Unlike the federal tax code, New Jersey taxes all capital gains as ordinary income. Your gains from selling investments, real estate, or business assets are taxed at the same rates as salary or business income.
NJ Capital Gains Tax Rates
NJ’s graduated rates range from 1.4% on income under $20,000 up to 10.75% on income over $1 million. For most professionals, capital gains fall in the 6.37%–8.97% range.
Combined Federal + NJ Rates
Total tax on a long-term capital gain can reach 30%+ for higher-income NJ taxpayers when combining federal rates with NJ’s ordinary income treatment.
Planning Strategies
Strategies include spreading sales over multiple tax years, using installment sales, harvesting capital losses, maximizing the primary residence exclusion, and considering NJ exit tax implications if planning to leave the state.
Disclaimer: The information provided is for general educational purposes only and does not constitute tax, legal, or investment advice. This content is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code. Tax outcomes depend on your specific facts and circumstances. Viewing this material does not create a CPA-client relationship. Personalized advice is provided only through a signed engagement letter.
Get Tax Tips from Greg
No spam, unsubscribe anytime.