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 remain compliant and avoid penalties. Understanding these taxes and their operational requirements is essential for smooth payroll processing.

Key Payroll Taxes Small Businesses Must Pay

• Federal Payroll Taxes: Employers must withhold and remit federal income tax, Social Security tax, and Medicare tax from employees’ wages. Employers also pay a matching 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 current withholding tables and remit these amounts to the New Jersey Division of Taxation.
• Unemployment Insurance (UI) Tax: Employers must pay New Jersey Unemployment Insurance tax to fund unemployment benefits. Rates vary based on employer experience and industry classification.
• Temporary Disability Insurance (TDI) and Family Leave Insurance (FLI): New Jersey requires payroll deductions for TDI and FLI, which provide wage replacement benefits to employees. Employers are responsible for withholding and remitting these contributions.

Operational Considerations

• Registration: Register with both the IRS for federal payroll taxes and the New Jersey Department of Labor and Workforce Development for state payroll taxes before paying employees.
• Payroll Systems: Use payroll software or services that automatically calculate and withhold the correct amounts for all applicable taxes, including New Jersey-specific deductions.
• Filing and Payment Frequency: Adhere to federal and state schedules for filing payroll tax returns and making payments. New Jersey may require quarterly or monthly filings depending on your payroll size.
• Recordkeeping: Maintain detailed payroll records, including tax withholdings, payments, and employee wage information, for at least four years as required for audits and compliance.
• Employee Classification: Correctly classify workers as employees or independent contractors to ensure proper payroll tax treatment and avoid penalties.

As of 2026

New Jersey’s payroll tax rates and withholding tables may be updated annually. Regularly review guidance from the New Jersey Division of Taxation and the Department of Labor to stay current with changes in tax rates, reporting requirements, and filing deadlines.