Tax Alert: New Payroll Tax for Jersey City

During 2018, New Jersey state enacted legislation that allowed municipalities with a population of over 200,000 to establish an employer payroll tax of up to 1%.  On November 20, 2018 the Jersey City council unanimously approved a 1% payroll tax on businesses operating within the city effective January 1, 2019.

Businesses are required to register with the city for the new payroll tax.  This tax is paid by employers, but it is not a withholding tax. No amount may be withheld from employees, rather, an employer calculates their tax liability based upon its total eligible payroll.

All private for-profit employers located within Jersey City with a quarterly gross payroll of $2,500 or more are subject to the tax on the wages of employees residing outside of Jersey City.  The tax is assessed on employees when:

  • The services are performed within the City of Jersey City
  • The services are performed outside of the City of Jersey City, but the place from which the services are supervised is in the City of Jersey City

Employees living within a Jersey City zip code are considered Jersey City residents and are excluded from this payroll tax.

Beginning first quarter 2019, employers were required to file and pay the new tax on a quarterly basis, with the first return and payment due by April 30, 2019.

For more information on the Jersey City Payroll tax, please feel free to reach out to a Sax Advisor at (973) 472-6250 or visit www.saxllp.com.