Comparison•2025 Tax Year•Last verified: January 2026
New Jersey vs Connecticut: Side Hustle Tax Comparison 2025
Compare New Jersey and Connecticut taxes for freelancers and gig workers. Both are high-tax states - see which costs more for your side hustle.
New Jersey and Connecticut are both high-tax Northeastern states with easy access to New York City. For side hustlers who need to be in the NYC orbit but want to avoid New York's taxes, these two states are common alternatives—but which one costs less?
Both states have progressive income tax systems with top rates near 7% for most side hustlers, though Connecticut's reaches 6.99% while New Jersey's can hit 10.75% for millionaires. This guide helps you understand the real-world differences.
**Why This Comparison Matters:**
Both states serve as NYC alternatives:
- **NYC access**: Both offer commutable access to Manhattan
- **Similar top rates for most**: ~6-7% for typical side hustler incomes
- **NJ millionaire tax**: NJ's 10.75% top rate kicks in at $1M+
- **Property taxes**: NJ has the highest in the nation; CT is also high
- **Different commute options**: NJ has PATH/NJ Transit; CT has Metro-North
For side hustlers choosing between NJ and CT suburbs while working with NYC clients, the tax differences are often smaller than expected.
Side-by-Side Tax Comparison
| Metric | New Jersey | Connecticut |
|---|---|---|
| State Income Tax Rate | 1.4% - 10.75% (progressive) | 3% - 6.99% (progressive) |
| Common Rate for Side Hustlers | 5.525% - 6.37% | 5% - 6% |
| Top Rate | 10.75% ($1M+) | 6.99% ($500K+) |
| Federal SE Tax | 15.3% | 15.3% |
| Est. Tax on $20K Side Hustle* | ~$8,500 | ~$8,326 |
| Annual Savings (CT vs NJ)* | — | ~$174 |
| Property Tax (Avg Rate) | 2.23% | 2.15% |
| Sales Tax | 6.625% | 6.35% |
*Assumes single filer with $60,000 W-2 income + $15,000 net side hustle income. Actual taxes vary based on deductions, filing status, and total income.
New Jersey Analysis
**New Jersey Tax Analysis for Side Hustlers**
New Jersey has a progressive income tax with rates that climb steeply, plus the highest property taxes in the nation.
**Key New Jersey Tax Facts (2025):**
- **Tax Type**: Progressive (7 brackets)
- **Rate Range**: 1.4% to 10.75%
- **Common Side Hustler Rate**: 5.525% to 6.37%
- **$75K-$500K bracket**: 6.37%
- **Top Rate ($1M+)**: 10.75%
**Example**: If you earn $90,000 from your W-2 job and $20,000 from side hustle income (net of expenses) in New Jersey:
- Federal SE Tax: ~$2,826
- Federal Income Tax on side income: ~$4,400
- NJ State Tax: ~$1,274
- **Total Tax on Side Hustle: ~$8,500** (42.5% effective rate)
New Jersey offers excellent NYC access via NJ Transit and PATH, diverse suburban options, and no sales tax on clothing.
Connecticut Analysis
**Connecticut Tax Analysis for Side Hustlers**
Connecticut has a progressive income tax with a top rate of 6.99%—lower than NJ's top rate but higher for some middle-income brackets.
**Key Connecticut Tax Facts (2025):**
- **Tax Type**: Progressive (7 brackets)
- **Rate Range**: 3% to 6.99%
- **Common Side Hustler Rate**: 5% to 6%
- **$100K-$200K bracket**: 6%
- **Top Rate ($500K+)**: 6.99%
**Example**: Same scenario—$90,000 W-2 job and $20,000 from side hustle income (net of expenses) in Connecticut:
- Federal SE Tax: ~$2,826
- Federal Income Tax on side income: ~$4,400
- CT State Tax: ~$1,100
- **Total Tax on Side Hustle: ~$8,326** (41.6% effective rate)
**Connecticut saves: ~$174/year** on $20,000 of side hustle income.
Connecticut offers Metro-North access to NYC, coastal living options, and lower top income tax rates than NJ.
Calculate Your Side Hustle Taxes
Use our calculator to see exactly what you'd owe in each state. Try entering your numbers, then switch between New Jersey and Connecticut to compare.
Which State Is Right for Your Side Hustle?
**New Jersey May Be Better If You:**
- Need direct PATH/NJ Transit access to Manhattan
- Work in industries centered in northern NJ (pharma, finance)
- Value NJ's no sales tax on clothing
- Prefer closer proximity to NYC (Hudson County, Bergen County)
- Have established networks in New Jersey
**Connecticut May Be Better If You:**
- Earn high income ($500K+) where CT's 6.99% cap beats NJ's 10.75%
- Prefer Fairfield County's coastal lifestyle
- Can use Metro-North for NYC commute
- Want slightly lower property taxes
- Prefer CT's lower overall tax rates
**Important Considerations:**
1. **The difference is small for most**: At typical side hustler income levels, NJ and CT taxes are within a few hundred dollars of each other annually.
2. **High earners favor CT**: Connecticut's 6.99% top rate vs NJ's 10.75% makes a significant difference for income over $500K-$1M.
3. **Property taxes are brutal in both**: NJ averages 2.23% and CT averages 2.15%—both among the highest in the nation. Factor this into total cost.
4. **Commute matters**: NJ offers more options for direct Manhattan commute (PATH, NJ Transit, ferry). CT is primarily Metro-North to Grand Central.
5. **Neither avoids NYC tax**: Both states avoid NYC's 3.876% city income tax, which is the main benefit vs living in NYC itself.
Frequently Asked Questions
Which is better for NYC commuters - New Jersey or Connecticut?
For pure tax purposes, they're very similar at most income levels—within a few hundred dollars per year. Connecticut is slightly cheaper for most side hustlers. The bigger factors are commute preference (NJ Transit/PATH vs Metro-North), lifestyle (urban NJ suburbs vs coastal CT), and where your specific job/clients are located.
Why do high earners prefer Connecticut over New Jersey?
Connecticut's top income tax rate is capped at 6.99%, while New Jersey's reaches 10.75% for income over $1 million. For very high earners, this 3.76% difference on income above $1M represents significant savings—potentially $37,600+ per million of income.
Are property taxes really that high in both states?
Yes. New Jersey has the highest average property taxes in the nation at 2.23%, and Connecticut is close behind at 2.15%. On a $500,000 home, you'd pay roughly $11,000-11,500 per year in property taxes in either state. This often exceeds income tax as the larger expense.
Related Comparisons
Sources
- • New Jersey Division of Taxation - 2025 Tax Rates
- • Connecticut Department of Revenue Services - 2025 Tax Rates
- • Tax Foundation - State Tax Data 2025
- • IRS Publication 334 - Tax Guide for Small Business