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Understanding Your New Jersey Paycheck
Navigating your paycheck can sometimes feel like deciphering a complex code. For employees in New Jersey, understanding the various deductions—both federal and state—is crucial for financial planning. This calculator helps you estimate your net pay by breaking down your gross earnings into taxes and other deductions specific to the Garden State.
How Your Paycheck is Calculated
Your net pay (what you actually take home) is determined by subtracting various taxes and deductions from your gross pay. Here's a breakdown of the key components:
1. Gross Pay
This is your total earnings before any deductions. It's calculated based on your hourly wage or annual salary and your pay frequency (e.g., weekly, bi-weekly, semi-monthly, monthly).
2. Pre-Tax Deductions
These are deductions taken from your gross pay before taxes are calculated. Common examples include contributions to a 401(k) or 403(b) retirement plan, health insurance premiums, and Flexible Spending Accounts (FSAs). Pre-tax deductions reduce your taxable income, meaning you pay less in federal and state income taxes.
3. Federal Taxes
Federal Income Tax (FIT): This is withheld based on the information you provide on your W-4 form (filing status, dependents, and any additional withholding). The amount depends on your taxable income and the federal tax brackets. Our calculator uses a simplified bracket system for estimation.
Social Security Tax: This is part of the Federal Insurance Contributions Act (FICA) tax. Employees contribute 6.2% of their gross wages up to an annual wage base limit ($168,600 for 2024).
Medicare Tax: Also part of FICA, employees contribute 1.45% of all gross wages. There's an additional Medicare tax of 0.9% on wages exceeding $200,000 for single filers or $250,000 for married filing jointly.
4. New Jersey State Taxes
New Jersey State Income Tax (NJ SIT): New Jersey has a progressive income tax system, meaning higher earners pay a higher percentage. Your NJ filing status and the number of exemptions you claim (each exemption reduces your taxable income by $1,000) determine your state tax liability.
New Jersey State Disability Insurance (NJ SDI) & Family Leave Insurance (NJ FLI): New Jersey requires employee contributions to these programs. For 2024, the combined rate is 0.15% of wages up to an annual wage base limit ($161,400 for 2024). These contributions fund benefits for temporary disability and family leave.
5. Post-Tax Deductions
These deductions are taken from your pay after all applicable taxes have been calculated and withheld. Examples include Roth 401(k) contributions, union dues, garnishments, or certain charitable contributions.
6. Net Pay
After all federal and state taxes, and both pre-tax and post-tax deductions are subtracted from your gross pay, the remaining amount is your net pay—your take-home pay.
Example Calculation:
Let's say you earn $2,000 bi-weekly, are single with no dependents, claim 0 NJ exemptions, and have $100 in pre-tax deductions and $20 in post-tax deductions per period.
Gross Pay: $2,000
Annual Gross Pay: $2,000 * 26 = $52,000
Annual Pre-Tax Deductions: $100 * 26 = $2,600
Annual Taxable Gross: $52,000 – $2,600 = $49,400
Estimated Annual Federal Taxable Income (after standard deduction): $49,400 – $14,600 (Single Std. Ded.) = $34,800
Estimated Annual Federal Income Tax: ~$3,900 (based on brackets)
Annual Social Security Tax: $52,000 * 0.062 = $3,224
Estimated Annual NJ State Income Tax: ~$1,500 (based on brackets)
Annual NJ SDI/FLI: $52,000 * 0.0015 = $78
Dividing these annual amounts by 26 (bi-weekly periods) and adding back the pre-tax and post-tax deductions will give you your estimated bi-weekly net pay. Use the calculator above with these numbers to see the detailed breakdown!