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How to Calculate Your Combined Federal and State Marginal Tax Bracket

The tax rate schedules list tax rates for Federal income tax only. It does not include state income tax. To account for "overlapping" levels of taxation (i.e., the fact that you can deduct state income tax payments on a federal tax return if you itemize deductions), to determine your combined (federal and state) income tax bracket, use the following formula:

(100% - Federal tax bracket) x State tax bracket = Effective State bracket

For example, if you are in a 3.5% state tax bracket and the 25% Federal tax bracket, your effective state tax bracket would be 3.00%, computed as follows:

(100% - 25%) x 3.5% = .75 x .035 = .03 = 3.00%

Next, add your effective state bracket to your federal tax bracket to determine your combined tax bracket using the following formula:

Federal tax bracket + Effective state bracket = Combined (state & federal) tax bracket

In the above example of a taxpayer in the 25% federal tax bracket and a 3.5% state tax bracket, the combined tax rate would be computed as follows:

25% Federal rate + 3% Effective state rate = 28% combined tax rate

Current New Jersey income tax rates are:

  • .014, .0175, .035, .05525, and .0637 for singles and married persons filing a separate return
  • .014, .0175, .0245, .035, .05525, and .0637 for married couples filing jointly, heads of households, and qualifying widowers

For additional information about New Jersey income tax, call the Division of Taxation at 609-588-2200 or visit the Web site

NOTE: This calculation method only works for taxpayers who are not subject to the rules that phase-out itemized deductions for taxpayers above a certain level of adjusted gross income. Taxpayers who are subject to the phase-out rules will pay a higher combined federal and state tax rate than the above formula indicates. Consult a professional tax advisor for additional information.