---
title: New Jersey Withholding Rate Change
description: Effective September 29, 2020, there is a withholding tax rate change for employees earning between $1 million and $5 million during the taxable year.
image: https://www.americanpayroll.org/images/default-source/default-album/newjersey.jpg?sfvrsn=ceb5254e_0
---

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By [Lia Coniglio, Esq.](https://blogs.payroll.org/pay-news-now/author/lia-coniglio-esq) on Oct 12, 2020 9:00:00 AM

# New Jersey Withholding Rate Change

Effective retroactive to January 1, 2020, the New Jersey tax rate on income between $1 million and $5 million has increased to 10.75% from 8.97%. Employers must withhold income tax at the rate of 21.3% from salaries, wages, and other income between $1 million and $5 million during the taxable year. The higher withholding rate will allow affected employees to “catch up” on withholdings for the year \[New Jersey Division of Taxation, [**News**](https://www.state.nj.us/treasury/taxation/git2020taxrate.shtml), 10-2-20\].

Employers do not have to correct prior withholdings but must use the new rate immediately and going forward. Updated [**percentage method withholding tables**](https://www.state.nj.us/treasury/taxation/pdf/NJWithholdingRateTablesPercentageMethod.pdf) are available. The New Jersey Division of Taxation will not impose interest or penalties for insufficient withholdings that may be due before September 29, 2020, if the underpayment is a result of the new rate.

Interested in more state and local payroll coverage? APA’s [***PayState Update***](https://ebiz.americanpayroll.org/ebusiness/ProductCatalog/Product.aspx?ID=19) eNewsletter is perfect for you.

---

*Lia Coniglio, Esq., is Managing Editor of PayState Update and Manager of State Payroll Information Resources for the APA.*

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