State note: N.J.S.A. 54A:5-1c — NJ taxes gain measured under NJ basis rules. [VERIFY] specific QSBS add-back mechanics at activation. Honest fallback to NJ Division of Taxation home page: previously linked njit10.shtml is scoped to 'Sale of a Residence' (per Wave-1A) — needs replacement with the canonical 'Net Gains or Income From Disposition of Property' chapter URL at activation.
Decode a New Jersey-resident QSBS exit
The decoder loads pre-filled with NJ as the state of residence. Change any input — issuance date, gain, basis — to see how this state's conformity rule reshapes the all-in tax.
What a New Jersey resident pays
$5,000,000 exit, 5+ year hold, post-OBBBA rules.
Example gain selected deterministically per state to reflect conformity profile; post-OBBBA rules, 5+ year hold, full federal 100% exclusion within the per-issuer cap. State arithmetic uses top marginal rate as a conservative upper bound — bracketed rates apply in practice. Change any input and open in the decoder to model your own facts, then cross-check the underlying citations on sources.
Residency test — which state's rule actually applies
State conformity applies based on the taxpayer's state of residence at the time of sale, not at the time of issuance. If you held QSBS while resident in one state, then established residency in New Jersey before the exit, New Jersey's rule generally controls the state-tax leg of the transaction.
Part-year residents typically apportion the gain across states by residency days within the tax year. Most states also apply a statutory residence test (often a 183-day physical-presence threshold or a domicile-plus-permanent-place-of-abode rule) that can pull a recent mover back into the prior state's tax base. Establish facts — driver's license, voter registration, primary home, days-in-state log — well before the sale, not after.
The decoder does not model multi-state apportionment or residency challenges. For relocation-timed exits, consult a CPA with state residency expertise; this is the single highest-impact lever in QSBS state planning. Residency at exit also interacts with the federal five-year holding period for state purposes — the federal clock keeps running across state lines, but the state-tax leg only attaches once you cross the state's residency threshold in the year of sale. Because New Jersey does not honor the federal exclusion in full, understanding the $10M-or-10×-basis exclusion cap matters most here: the slice the state will tax is exactly the slice the federal cap would otherwise have shielded. Compare New Jersey's partial regime against California, which decouples entirely.
State-return reporting
Federally, the §1202 exclusion is reported on Form 8949 with adjustment code Q and the unexcluded slice flows to Schedule D with the 28% rate via the Schedule D 28% Rate Gain Worksheet.
The corresponding New Jersey state-return line varies by tax year and form revision. Rather than pin a specific line number (which would stale within one filing season), this page directs you to the current New Jersey DOR instructions for the year you are filing. If you would like a per-state line-number table maintained at this site, file a request via contact.
Recent New Jersey legislative activity affecting QSBS
[VERIFY] No known recent New Jersey legislative changes affecting §1202 state conformity as of 2026-05-11. Federal OBBBA (P.L. 119-21 §70431, signed 2025-07-04) modified federal §1202; state-level response varies by jurisdiction. This slot is reviewed during each conformity-manifest refresh.
New Jersey QSBS — frequently asked
Does New Jersey tax my §1202 QSBS gain at the state level?
New Jersey partially decouples. Some part of the federal §1202 exclusion is not honored at the state level — the state computes the gain under its own basis or add-back rules. The exact mechanics are state-specific; consult a CPA for your facts.
What is New Jersey's top marginal rate on capital gains?
New Jersey's top marginal personal income rate on long-term capital gains is approximately 10.75% (reference figure for 2026; consult the state DOR for your exact bracket). Most states tax capital gains at ordinary-income rates.
If I moved to New Jersey just before selling QSBS, does the state resident rule apply?
State conformity follows the taxpayer's state of residence at the time of sale, not at issuance. If you established New Jersey residency just before selling QSBS, New Jersey's rule generally applies — subject to that state's domicile, statutory-residence (days-physical-presence), and part-year apportionment tests. Pre-exit relocation is a common founder planning lever; the rules to clear are state-specific.
Does New Jersey honor the federal §1045 rollover?
New Jersey's treatment of an IRC §1045 rollover at the state level follows state conformity to federal §1045 — usually parallel to its §1202 conformity. Not modeled by this calculator; consult a CPA for state-specific guidance.
Where do I report the §1202 adjustment on the New Jersey return?
New Jersey taxes the gain under its own basis rules; a partial federal-exclusion add-back may apply. The exact return line depends on the form revision; consult the current New Jersey DOR instructions and a CPA.
Compare New Jersey to other states
Same federal exclusion, different state rule. The 50-state grid colors each.