Home » News » Which state charges you the least in taxes? – Telemundo New York (47)

Which state charges you the least in taxes? – Telemundo New York (47)

Both New York and New Jersey are among the states with the highest tax rates in the country, according to the most recent report from the Tax Foundation. But which one hits taxpayers’ wallets the least?

In general, families residing in the Garden State are likely to pay less taxes compared to those living in New York, as the Big Apple imposes additional taxes.

New Yorkers are already struggling to afford rent, but a significant increase is expected in 2022, according to a new StreetEasy study called “New York Housing Predictions for 2022: What New Yorkers Can Expect”.

Leaving the glamorous Big Apple for western New Jersey would mean significantly lower tax rates. While both areas are among the most expensive in the country, New Jersey has clear tax advantages.

Additionally, the Garden State not only has a lower income tax rate, it also has a lower sales tax compared to New York City.

AN EXPENSIVE, VERY EXPENSIVE NEW YORK CITY

In addition to what a taxpayer pays Uncle Sam and the state, New York City imposes a municipal levy on its residents. The city tax is at least 2.907% and rises to 3.648% for a single person’s income of more than $ 50,000 and to $ 3,876 percent for income of more than $ 500,000.

New Jersey has a state income tax, but not a local income tax. New Jersey cities do not collect the income tax that New York City does, so you would be left with about 3% more of your paycheck.

DESPITE INFLATION, SHOPPING IN NEW JERSEY MAY BE LESS EXPENSIVE THAN IN NEW YORK

Shopping for groceries and other essentials can be less expensive in New Jersey, as each county in New York City has a sales tax of 8.875%, on average. New Jersey’s state retail sales tax is 6.625%, less than New York’s. Before 2017, sales tax rates were 7 percent.

However, areas of New Jersey that are in designated business zones, like much of Jersey City, have an even lower sales tax of just 3.5%.

COMPARING NET SALARY BETWEEN STATES

Suppose you file taxes as head of household and have an annual income of $ 75,000. New York State would charge you a tax of $ 3,570 and New York City another of $ 2,324, for a total tax of $ 5,894. This is 7.86% of your $ 75,000 in income.

But your tax liability is less if you are a New Jersey resident, as your total income tax on $ 75,000 of income would be $ 1,331, or 1.78% of your income. For the amount you earn per year and your marital status, you would be in the 3.5% tax bracket.

Another bonus: New Jersey also has a property tax deduction. If you are a tenant, 18% of your rent is considered for property taxes.

LIVING IN NEW JERSEY, WORKING IN NEW YORK

Living in the Garden State while working in New York City can be more advantageous than vice versa, as in New Jersey you can still find affordable housing, multiple transportation options to Manhattan, and easier access to parking for car owners.

The Big Apple has some of the highest housing costs in the country and prices continue to rise.

In August 2021, the median value of a residential home increased to $ 722,787, a 4.5% increase from 2020 levels, according to Zillow data. In contrast, in New Jersey, value is just a fraction of that, to $ 421,124, and prices increased 18.9% over the past year. Housing costs in the Garden State are more within reach even when its property taxes are among the highest in the country.

In Union City, for example, it is still possible to find one bedroom, living room and kitchen apartments for $ 1,200 or even less, which in New York would be almost impossible.

Plus, renting in neighborhoods located in North or North Central New Jersey would take just 30 minutes to an hour away from Manhattan. And the possibility of reliable transportation is diverse, from buses to a ferry across the Hudson River or trains to Penn Station.

TAXES WHEN LIVING IN NEW JERSEY BUT WORKING IN NEW YORK

New Jersey residents working in New York State must file a New York Non-Resident Income Tax Return (Form IT-203) as well as a New Jersey Resident Income Tax Return ( Form NJ-1040). The employer will have withheld New York state taxes for the entire year, but will also need to file in New Jersey.

Technically, it could be said that they pay double taxes. However, the good news is that the taxpayer will get a New Jersey credit for taxes paid to New York. Although it should be noted that New Jersey uses a formula to calculate the maximum percentage that can be credited, although it is usually a fairly generous portion.

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