New Jersey does not have a capital gains tax in the sense of a separate rate or a holding-period discount. A gain from selling stock, a rental property or a home is part of New Jersey gross income, and it is taxed through the same rate schedules as wages.
This guide sets out how the gain is calculated, what the rate schedule does to a large gain, how the home sale exclusion and the new qualified small business stock exclusion work, what a nonresident seller of New Jersey real estate must pay at closing, and how losses are treated, using New Jersey Division of Taxation documents read on 2 November 2026.
Residents report gains on Schedule NJ-DOP, and the instructions say to "Complete Schedule NJ-DOP and enter the amount from line 4" on line 19 of the NJ-1040. The gain is then part of the income that the rate schedules tax. The instructions give gain or loss as the sales price less expenses of sale and basis, and in general you use the cost or adjusted basis you used for federal purposes. Exceptions apply to partnership, sole proprietorship and rental property interests, and to S corporation shares, where a New Jersey adjusted basis may be required.
The 2025 booklet lists one set of rate schedules and does not list a separate schedule for long-term gains, so a long-term gain is taxed at the same rates as a short-term gain; the federal holding-period split does not apply. This is our reading of the booklet rather than a sentence the Division states.
Several kinds of gain are outside this: the booklet lists gifts and inheritances among items that are not taxable, and it excludes interest and capital gains from obligations of New Jersey or its political subdivisions and from direct federal obligations such as Treasury bills, notes and bonds.
These are the 2025 New Jersey Tax Rate Schedules printed in the NJ-1040 booklet, which is the return filed in 2026. The 2026 NJ-1040 instructions had not been published when we read the Division's site on 2 November 2026, but the Division's 2026 Form NJ-1040-ES (estimated tax) instructions print the same rates and income bands, so the schedule appears unchanged for 2026; confirm when the 2026 booklet appears. The booklet states that taxpayers with income of $100,000 or more must use the Tax Rate Schedules rather than the Tax Table.
| Single or married filing separately: taxable income over | But not over | Rate on that slice |
|---|---|---|
| $0 | $20,000 | 1.4% |
| $20,000 | $35,000 | 1.75% |
| $35,000 | $40,000 | 3.5% |
| $40,000 | $75,000 | 5.525% |
| $75,000 | $500,000 | 6.37% |
| $500,000 | $1,000,000 | 8.97% |
| $1,000,000 | no limit | 10.75% |
| Joint, head of household or surviving spouse: taxable income over | But not over | Rate on that slice |
|---|---|---|
| $0 | $20,000 | 1.4% |
| $20,000 | $50,000 | 1.75% |
| $50,000 | $70,000 | 2.45% |
| $70,000 | $80,000 | 3.5% |
| $80,000 | $150,000 | 5.525% |
| $150,000 | $500,000 | 6.37% |
| $500,000 | $1,000,000 | 8.97% |
| $1,000,000 | no limit | 10.75% |
Because the gain is stacked on top of your other income, it is taxed at your top slice rates. The table below is our arithmetic using the 2025 schedules, taking the stated amount as taxable income (line 42) before and after the gain. It is not an official calculation and it ignores credits and anything outside the schedule.
| Our illustration | Taxable income before gain | Gain | Tax before | Tax after | Tax added by the gain | Share of the gain |
|---|---|---|---|---|---|---|
| Single | $60,000 | $40,000 | $1,822.50 | $4,243.75 | $2,421.25 | 6.05% |
| Single | $450,000 | $200,000 | $26,538.75 | $43,178.75 | $16,640.00 | 8.32% |
| Joint | $120,000 | $100,000 | $3,855.00 | $9,971.50 | $6,116.50 | 6.12% |
The second row shows the effect of the upper brackets: part of the $200,000 gain is taxed at 8.97% because it takes income past $500,000.
For a principal residence, the Division states that the gain is calculated the same way as for federal purposes and that any amount taxable for federal purposes is taxable for New Jersey. You may exclude part or all of the gain based on the federal rules: up to $500,000 if married filing jointly (if only one spouse meets the ownership and use tests, that spouse can exclude up to $250,000) and up to $250,000 for any other filing status.
The Division says a reduced exclusion may be available if you do not meet the requirements, for example because of a change in place of employment, health or unforeseen circumstances. It states that you may qualify whether you still live in New Jersey or became a resident of another state. A second home, vacation home or property you rent to someone else is not a principal residence under the booklet's definition. For the federal rules themselves, see our home sale capital gains guide.
The FY2027 Tax Expenditure Report records P.L. 2025, Chapter 67, which provides an exclusion from New Jersey gross income of certain net capital gains from the sale, exchange or other disposition of qualified small business stock, to the extent the gains are exempt from federal taxation under section 1202. The report says the law went into effect on July 1, 2025 and applies to taxable years beginning on or after January 1, 2026, with the citation N.J.S.A. 54A:6-34. It describes the exclusion as conforming to the federal provision.
That means the exclusion matters for gains you report on your 2026 return, filed in 2027. The 2025 booklet we read does not discuss it, so check the 2026 Schedule NJ-DOP instructions for how to claim it and for any limits before relying on it.
New Jersey residents who sell and stay residents file Form GIT/REP-3 at closing, which exempts them from an estimated payment; they pay the tax when they file the NJ-1040. A resident who sells a New Jersey home and moves out of the state is treated as a nonresident for the purpose of the sale, and New Jersey may require an estimated tax payment at closing.
Nonresident sellers must pay estimated Gross Income Tax of 2% of the consideration or 8.97% of the net gain, before or at the time of closing. The Division's guide gives the two bases without saying which applies in a given case, so use the form instructions or your settlement agent. A nonresident claiming the principal residence exclusion can use the GIT/REP-3 exemption, and sellers who overpay may be able to claim an early refund with Form A-3128.
| Our illustration | Sale price | Net gain | 2% of consideration | 8.97% of net gain |
|---|---|---|---|---|
| Nonresident sells a rental property | $400,000 | $100,000 | $8,000 | $8,970 |
The two figures are our arithmetic on the Division's percentages and show only how far apart the two bases can be.
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