New Jersey’s 10.75% top marginal individual income tax rate ranked fourth highest in the nation to start 2026, according to an analysis released Tuesday by the Tax Foundation, an independent tax policy think tank based in Washington, D.C.
California (13.3%), Hawaii (11%) and New York (10.9%) are the only states whose top marginal individual income tax rates exceeds New Jersey’s.
California also imposes a 1.1% payroll tax on wage income, bringing the all-in top rate to 14.4 percent as of 2024.
The District of Columbia tied with New Jersey for the fourth highest income tax rate, followed by Oregon (9.9%) and Minnesota (9.85%).
Forty-three states and the District of Columbia levy individual income taxes. Forty-one tax wage and salary income. New Hampshire exclusively taxes dividend and interest income while Washington only taxes capital gains income.
Seven states—Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, and Wyoming—levy no individual income tax at all.
Of those states taxing wages, 11 have single-rate tax structures, with one rate applying to all taxable income.
The rest, including New Jersey, levy graduated-rate income taxes, with the number of brackets varying widely by state. For example, the top rate kicks in at or above $1 million in California, Massachusetts, New Jersey, New York, and the District of Columbia.
In 2025, six states enacted individual income tax rate reductions: Mississippi, Iowa, Louisiana, Missouri, Nebraska and New Hampshire.
The biggest changes in income taxes came in these three states:
- Maryland: Retroactive to January 1, 2025, new rules increased taxes on high earners, including a 6.25% rate on income over $500,000, 6.5% on income over $1 million, and a 2% capital gains surcharge for individuals with a federal adjusted gross income (AGI) exceeding $350,000.
- Washington: The state implemented a 2.9% tax on capital gains income exceeding $1 million.
- Massachusetts: Maintained a 5% tax on most income but taxes specific capital gains at a higher 8.5% rate
To see the full Tax Foundation study, click here.
