What payroll taxes do small businesses need to pay?

Payroll Taxes for Small Businesses in New Jersey

Small businesses operating in New Jersey must manage several payroll tax obligations to stay compliant and avoid penalties. Understanding these taxes helps streamline payroll processing and ensures accurate bookkeeping.

Key Payroll Taxes in New Jersey

• Federal Payroll Taxes: Employers must withhold and remit federal income tax, Social Security tax, and Medicare tax from employee wages. Employers also pay the employer portion of Social Security and Medicare taxes.
• New Jersey State Income Tax Withholding: Employers are required to withhold New Jersey state income tax from employee wages based on state withholding tables and remit it to the New Jersey Division of Taxation.
• Unemployment Insurance (UI): Employers pay New Jersey Unemployment Insurance tax. Rates vary based on the employer’s experience and industry classification. This tax funds unemployment benefits for eligible workers.
• Temporary Disability Insurance (TDI) and Family Leave Insurance (FLI): New Jersey requires payroll deductions for TDI and FLI. Employers must withhold these employee contributions and remit them to the state. Employers also contribute to TDI.

Operational Considerations

• Registration: Register with the New Jersey Division of Revenue and Enterprise Services to obtain necessary tax accounts for withholding and unemployment insurance.
• Payroll Systems: Use payroll software or services that automate tax calculations, withholdings, and filings to reduce errors and save time.
• Reporting and Filing: File payroll tax returns regularly as required by federal and state agencies. New Jersey typically requires quarterly reporting for state payroll taxes.
• Recordkeeping: Maintain accurate payroll records including wages, tax withholdings, and tax payments for at least four years as required by New Jersey regulations.
• Employee Classification: Properly classify workers as employees or independent contractors to ensure correct payroll tax treatment and compliance.

As of 2026, staying current with New Jersey payroll tax rates and filing requirements is essential for smooth business operations and avoiding penalties.