New Jersey Mileage Deduction 2026: 10.75% Top Rate

New Jersey's income tax tops out at 10.75%, the fourth highest in the country. Your mileage deduction reduces both federal and NJ state taxes. At higher income levels, the state savings per deductible mile approach California territory.

The Savings

At 72.5¢/mile and 15,000 business miles, using a mid-bracket rate of 6.37%:

How to File

Deduct on federal Schedule C, Line 9 at 72.5¢/mile. New Jersey uses your federal adjusted gross income as the starting point, so the deduction flows through to your state return. Quarterly estimated payments are required if you expect to owe. Keep a mileage log with the date, destination, purpose, and miles for each trip.

Employer Reimbursement

New Jersey does not require private employers to reimburse mileage for general business driving. The state does require reimbursement for uniform maintenance expenses.

FAQ

Does New Jersey have local income taxes?

No. New Jersey has no local or municipal income taxes. The state rate is the only layer above federal.

Does my mileage deduction reduce New Jersey state taxes?

Yes. New Jersey uses your federal AGI as the starting point. Your Schedule C mileage deduction reduces that number, which directly reduces your state tax at rates up to 10.75%.

Can W-2 employees deduct mileage in New Jersey?

No. The mileage deduction for W-2 employees was permanently eliminated under the One Big Beautiful Bill. New Jersey does not require employer reimbursement for mileage, so if your employer does not reimburse, you have no tax remedy.

Fourth-highest state tax. Make every deduction count →