Update Applicable to:	Effective Date
Newark and Jersey City (municipalities with a population greater than 200,000 may levy the tax under the Local Tax Authorization Act)	January 20, 2026

What happened?

On January 20, 2026, the Governor signed Public Law (P.L) 2025, c.314, which took effect immediately. The law updates municipal employer payroll tax administration, most notably requiring mandatory State wage/withholding data sharing with municipalities for limited verification and non‑filer identification.

Overview

Effective January 20, 2026, New Jersey law requires the Division of Taxation to share employer wage and withholding data with municipalities that impose a local employer payroll tax. The data may be used solely to verify reported payroll and identify non‑filers.

The law applies only to municipalities that levy a local employer payroll tax, which currently includes Newark and Jersey City.

Why this matters

• Municipalities are expected to use State provided wage/withholding data to validate the reported payroll and to identify non-filers, and that will increase the likelihood of outreach or assessment if returns are missed or incomplete.

• If an employer already pays an out‑of‑state payroll tax for certain employees’ out‑of‑state services, the New Jersey municipal employer payroll tax should not apply to those employees, provided that the employer submits the required documentation to the local taxing municipality.

• Quarterly filings remain due on April 30, July 31, October 31, and January 31 of the year immediately following the filing year. Interest applies to late payments (8% on the first $1,500 and 18% above that), missing a deadline can create immediate financial exposure.

Action Steps for Compliance

• Register and file locally:
  • Newark: Review the city’s payroll tax registration form and current booklet; ensure you are registered and prepared to file and pay quarterly.
  • Jersey City: Use the Payroll Tax portal to register/file; follow the listed due dates and payment instructions.

• Integrate filings into your payroll calendar. Ensure your internal quarter‑end processes support timely submission of required returns and payments under municipal deadlines to avoid statutory interest charges.

• If an employer is subject to out-of-state payroll taxes for certain employees, compile and submit the required documentation to the NJ municipality to prevent double taxation. (The law places documentation with the municipality, not Department of Community Affairs (DCA).

• This municipal employer payroll tax is borne by the employer, and local ordinances must prohibit withholding this tax from employee remuneration.

Additional Information

• A municipality that imposes a local employer payroll tax may retain up to 3% of annual collections for administrative costs.

• The municipal employer payroll tax does not apply to wages already subject to an out‑of‑state municipal payroll tax for services performed outside New Jersey. Employers must submit required documentation directly to the local taxing municipality to claim the exemption.

• Under New Jersey Statutes Annotated (N.J.S.A.) 40:48C‑15(d), if a municipality’s American Community Survey (ACS, U.S. Census Bureau) 5‑year estimate of median household income is greater than or equal to $55,000, then all employer payroll tax revenue must be deposited into a school‑purposes trust fund and paid out monthly according to the statute’s formula. This requirement applies to Jersey City but not to Newark.

Source References

• New Jersey – Senate Bill (SB) S4219 – Concerns administration of employer payroll tax and permits disclosures of certain State taxpayer information.

Resources

• City of Newark – Payroll Tax Booklet
• City of Newark – Payroll Tax Forms
• City of Jersey City – Payroll Tax FAQ
• City of Jersey City – Filing Portal

This communication is intended solely for the purpose of conveying information. The present post might incorporate hyperlinks directing readers to websites managed by third-party entities. The inclusion of any links within this communication is meant to serve as points of reference and could encompass opinion articles from various law firms, articles from HR associations, official websites, news releases, and documents of government agencies, and other relevant third-party sources. Vensure has no authority over these external websites and bears no responsibility for their content. Furthermore, Vensure does not endorse the materials present on these websites. The contents of this communication should not be interpreted as legal advice or as a legal standpoint concerning specific facts or scenarios. Nor should it be deemed an exhaustive compilation of facts potentially pertinent to federal, state, or local laws. It is strongly advised that employers solicit legal guidance from an employment attorney when undertaking actions in response to any legal updates provided. This is due to the possibility of future alterations occurring in federal, state, and local laws, regulations, as well as the directives and guidelines issued by governing agencies. These changes may transpire at any given time, potentially rendering certain portions of the content within this update void or inaccurate.