The New Jersey Division of Taxation (DOT) has issued revised percentage method withholding tables for wages paid on or after September 1, 2018. The revised tables reflect a new withholding rate of 15.6% for income over $5 million. Employers should start using the new withholding tables as soon as possible, but no later than September 1 [DOT, Pub. NJ-WT, New Jersey Income Tax Withholding Instructions, rev. July 2018].
Legislation enacted on July 1, 2018, created a new personal income tax rate of 10.75% for income over $5 million (regardless of the taxpayer’s filing status), retroactive to January 1, 2018. For the remainder of 2018, there is a new withholding rate of 15.6% for wages over $5 million. The higher withholding rate should allow affected employees to catch up on their withholding for the year, without employers having to adjust withholding back to January 1 [DOT, Notice, 7-23-18].
The DOT will not impose interest or penalties for insufficient payment of estimated tax and/or withholding tax that may otherwise be due before September 1, 2018, if the insufficiency is a result of the new tax rate.
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