NJ Ranks as the 4th Worst State for the Wealthy in Terms of Taxation

by Staff March 5, 2024

written by Staff March 5, 2024

Aerial View of Jersey City, NJ

When it comes to the tax landscape for affluent individuals, New Jersey emerges as one of the least favorable destinations in the United States, and for good reason. But according to a recent study conducted by WalletHub, which evaluated the tax burden across different income brackets in all 50 states, New Jerseyans rank poorly for high-income earners, landing in the 48th position.

To determine these rankings, WalletHub analyzed the proportion of a resident’s income allocated towards various taxes, including sales and excise taxes, property taxes, and income taxes. The findings reveal that high-income earners in New Jersey contribute a significant portion of their income towards taxes, with the state imposing a tax burden of 11.97 percent. Talk about Uncle Sam.

In contrast, low-income earners fare slightly better in New Jersey, with the state ranking 18th in terms of tax burden for this demographic. However, even low-income earners in New Jersey are still devoting a notable portion of their income, approximately 9.37 percent, towards taxes.

For middle-income earners, the tax burden in New Jersey falls in the middle of the pack, with the state securing the 26th spot. Middle-income individuals in New Jersey allocate approximately 9.85 percent of their income towards taxes, reflecting a substantial financial commitment.

These rankings underscore the challenging tax environment that high-income individuals face in New Jersey. Despite its reputation as an affluent state, the tax burden for wealthy residents is notably burdensome, ranking among the highest in the nation.

The implications of these findings extend beyond individual taxpayers, impacting broader economic dynamics and wealth distribution within the state. High taxes on affluent individuals may discourage wealth accumulation and investment, potentially influencing migration patterns and economic growth.

In light of these considerations, policymakers and stakeholders in New Jersey may need to reevaluate the state’s tax policies to strike a balance between revenue generation and economic competitiveness. Addressing concerns related to the tax burden on high-income earners could help foster a more favorable environment for wealth creation and retention within the state.

Ultimately, the findings from WalletHub’s study serve as a reminder of the complex interplay between taxation, economic policy, and individual prosperity. As New Jersey grapples with its tax landscape, finding sustainable solutions that promote growth and prosperity for all residents will remain a critical priority.