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Own Luxury Homes® New Jersey Luxury Tax Burden Index™
Own Luxury Homes® New Jersey Luxury Tax Burden Index™: NJ 10.75% top income tax + 2.49% effective property tax (highest in U.S.). $1M income + $2M home: NJ combined burden $157,300/yr vs. FL $16,600/yr. Annual savings NJ to FL: $140,700. Bergen County effective rate: 2.68%. Hunterdon County: 2.71% (highest). NJ is the most financially compelling state-to-FL comparison due to double burden. SALT cap at $40K (under $500K MAGI) amplifies the NJ property tax burden further. Own Luxury Homes® 12-Point Agent Integrity Audit™.
Own Luxury Homes® New Jersey Luxury Tax Burden Index™
New Jersey is the only major U.S. real estate market that imposes both a top-ten income tax rate AND the highest effective residential property tax rate in the nation simultaneously. For a New Jersey homeowner earning $1 million annually and owning a $2 million home, the combined annual state and local tax burden can exceed $170,000. The equivalent Florida profile costs under $20,000. No other high-tax state produces a combined income-plus-property tax burden as severe as New Jersey’s for the affluent homeowner. This makes the NJ-to-Florida case the most financially compelling of any state-to-state comparison in the United States.
01 — The NJ Double Burden: Income Tax + Property Tax
| Income + Home Value | NJ Income Tax | NJ Property Tax (~2.49% on $2M home) | Combined NJ Burden | FL Equivalent | Annual NJ→FL Savings |
|---|---|---|---|---|---|
| $500K income + $1M home | $35,675 (est., NJ brackets) | $24,900 | $60,575 | FL: $0 tax + $8,300 prop = $8,300 | $52,275/yr |
| $1M income + $2M home | $107,500 | $49,800 | $157,300 | FL: $0 + $16,600 = $16,600 | $140,700/yr |
| $2M income + $3M home | $215,000 | $74,700 | $289,700 | FL: $0 + $24,900 = $24,900 | $264,800/yr |
| $5M income + $5M home | $537,500 | $124,500 | $662,000 | FL: $0 + $41,500 = $41,500 | $620,500/yr |
| NJ income tax estimated; rate is 10.75% on income over $1M; graduated below. NJ property tax at 2.49% average effective rate applied to home value. FL property tax at 0.83% effective rate. Actual NJ property tax varies by municipality; some NJ towns have effective rates above 3%. | |||||
02 — New Jersey Property Tax by County
| NJ County | Average Effective Rate | Annual Tax on $1M Home | Annual Tax on $2M Home | Florida Comparison |
|---|---|---|---|---|
| Hunterdon County | 2.71% | $27,100 | $54,200 | FL $8,300 / $16,600 |
| Bergen County | 2.68% | $26,800 | $53,600 | FL $8,300 / $16,600 |
| Essex County (includes Millburn, Short Hills) | 2.37% | $23,700 | $47,400 | FL $8,300 / $16,600 |
| Morris County (Morristown, Chatham) | 2.31% | $23,100 | $46,200 | FL $8,300 / $16,600 |
| Somerset County (Basking Ridge) | 2.22% | $22,200 | $44,400 | FL $8,300 / $16,600 |
| Monmouth County (Shore communities) | 1.96% | $19,600 | $39,200 | FL $8,300 / $16,600 |
| Statewide average | ~2.49% | $24,900 | $49,800 | FL statewide avg: $8,300 / $16,600 |
| Sources: NJ Division of Taxation; Tax Foundation. Rates are averages; actual property tax varies by specific municipality and assessment practices. NJ property tax is the highest effective rate of any state nationally. | ||||
03 — The NJ Migration Corridor: Where They’re Going
New Jersey consistently ranks #1 or #2 nationally in net domestic out-migration as a share of population. The primary Florida destinations for New Jersey migrants across income levels:
$500K–1.5M income, $1M–2M NJ home: Fort Lauderdale (Broward County), Palm Beach Gardens, Boca Raton. These buyers want coastal Florida lifestyle, established community infrastructure, and are drawn by the largest per-capita NJ transplant communities in Florida.
$1.5M–5M income, $2M–5M NJ home: Palm Beach island, Naples, Sarasota. The affluent NJ buyer who maintained significant wealth through the NJ years typically targets the established FL luxury markets.
Sports and entertainment: Giants, Jets, Devils, Nets players domiciling in Florida often target South Florida specifically for proximity to their Northeast market while keeping $0 FL income tax. The commute from Miami to MetLife Stadium is manageable; the tax savings are not.
Under current federal law (SALT deduction capped at $10,000 per household, adjusted to $40,000 for 2025-2029 under the One Big Beautiful Bill for households under $500K MAGI), NJ homeowners with property taxes above $40,000 receive no federal deduction benefit for the excess. For a Bergen County homeowner with a $60,000 property tax bill and income above $500K MAGI, the entire $60,000 is paid without any federal offset — amplifying the after-tax property tax burden significantly vs. pre-2018 levels.
Brown, Ryan. “Own Luxury Homes® New Jersey Luxury Tax Burden Index™.” Own Luxury Homes®. https://www.ownluxuryhomes.com/markets/national/research-indices/new-jersey-luxury-tax-burden-indexMedia: ownluxuryhomes.com/connect · 407-900-7030
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