Updated October 5, 2026. Quick answer: Yes. The state’s GIT-5 says “Most investment income is taxable in New Jersey as interest,” dividends or gains, on a graduated schedule that for 2025 runs from .014 (1.4%) on the first $20,000 to .1075 (10.75%) on income of $1,000,000 and over.
How New Jersey treats dividends and interest
| Item | What the documents say |
|---|---|
| Treatment | Taxable on the graduated schedule; New Jersey and federal obligation interest exempt |
| 2025 rates | From .014 (1.4%) on the first $20,000 of taxable income to .1075 (10.75%) on income of $1,000,000 and over |
| Other states’ municipal bonds | The instructions list “Obligations of states and their political subdivisions, other than New Jersey;” as taxable |
| Qualified investment funds | Distributions from a fund that must “Invest 80% or more of its funds (other than cash or receivables)” in New Jersey-exempt securities are exempt |
| Reporting thresholds | Schedule B is required when line 16a is more than $1,500; “If line 16b is more than $10,000, you must” list the sources |
A $20,000 example
Dividends and interest of $20,000 taxed wholly at the lowest 2025 rate, 1.4%, would add $280; at the top rate, 10.75%, $2,150. Your own figure depends on your bracket.
What changes in 2026
The 2025 booklet and the January 2026 GIT-5 are the latest New Jersey documents read, and they print no 2026 rate schedule.
Federal rules
The state’s treatment sits on top of the federal one. Qualified dividends and ordinary dividends are sorted out on the Form 1099-DIV, as the site explains in Box 1a and 1b: ordinary versus qualified dividends, and interest is reported as covered in 1099-INT Box 1. The IRS explains the federal side in Topic no. 403, Interest Received and Topic no. 404, Dividends.
Related: whether New Jersey taxes capital gains, whether New Jersey taxes pensions, how New Jersey taxes retirement income, dividends and interest tax by state, and how tax-exempt interest is reported.
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Answer againSources
- 2025 NJ-1040 Resident Return Instructions: https://www.nj.gov/treasury/taxation/pdf/current/1040i.pdf
- GIT-5 Nontaxable Investment Income (January 2026): https://www.nj.gov/treasury/taxation/pdf/pubs/tgi-ee/git5.pdf
Sources: the primary documents linked above, read on October 5, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.