Key figures
New Jersey payables
2026, with sources
The ABC test
New Jersey classifies workers with the ABC test from its Unemployment Compensation Law, and applies it across unemployment, disability and wage law. A worker is an employee unless the company shows that the worker is free from its control, that the work is outside its usual course of business or performed outside all its places of business, and that the worker is customarily engaged in an independently established trade. Failing any one part makes the worker an employee.
In May 2026 the Department of Labor adopted regulations (N.J.A.C. 12:11), operative October 1, 2026, codifying how it applies the test across the unemployment, disability, wage and earned sick leave laws it enforces. They don’t create a new test; they write down the Department’s reading of each prong, including what counts as the “usual course” of a business under part B. Misclassification exposes the company to back unemployment, TDI and FLI contributions as well as penalties.
1099s and contractor reporting
New Jersey wants copies of 1099s when $1,000 or more was paid in the year or any New Jersey tax was withheld, filed electronically by February 15. Filing through the federal Combined Federal/State Filing program satisfies the requirement for forms filed that way.
Independent contractors working in New Jersey are also reported to the State Directory of New Hires, with the contractor’s name, address, Social Security number and start date.
An example: a startup pays a New Jersey freelance developer $12,000 over 2026. It reports the developer to the State Directory of New Hires within 20 days of the engagement starting, files the 1099-NEC with the IRS, and files a copy with the Division of Taxation by February 15, 2027 because the payments passed $1,000. Before any of that, it checks the ABC test; part B is hard to meet when the contractor is building the company’s own product.
Use tax
When a vendor doesn’t charge New Jersey sales tax on something taxable, the buyer owes 6.625% use tax and reports it on its sales and use tax return. Electronically delivered prewritten software is exempt when used directly and exclusively in the conduct of the buyer’s business; remotely accessed SaaS generally isn’t taxable in the first place.
Deadlines
- Within 20 daysReport a new independent contractor to the State Directory of New Hires
- Feb 151099 copies to the Division of Taxation, electronically1099 with NJ-W-3
The federal baseline
This page covers what New Jersey adds. The federal rules underneath it apply here too.
Common questions
Can we pay someone in New Jersey as a contractor?
Not just a 1099. New Jersey uses the ABC test: a worker paid for services is an employee unless the company shows all three of (A) freedom from control, (B) work outside its usual course of business or places of business, and (C) an independently established trade. The Department of Labor adopted regulations codifying its reading of the test in 2026, operative October 1, 2026, and a 1099 or a signed contractor agreement doesn’t change the answer.
Do we report contractors to the new-hire registry?
Yes. New Jersey requires employers to report independent contractors working in the state, as well as employees, to the State Directory of New Hires, generally within 20 days.
Payables next door
- DEDelaware payablesDelaware has no sales or use tax, so there is nothing to accrue on purchases. 1099s for Delaware contractors go directly to the Division of Revenue, and uncashed vendor checks are unclaimed property.
- NYNew York payablesNew York wants a written contract for freelancers and a new-hire report for contractors over $2,500. Untaxed software purchases owe use tax, and stale vendor checks escheat after three years.
- PAPennsylvania payablesPennsylvania wants 1099s by January 31 and 3.07% withheld from Pennsylvania-source payments of $5,000 or more to nonresident contractors. Because SaaS is taxable, use tax on software is a real payables item.
Founder guides on this
- PeopleContractor or employee? Classification for startupsContractor or employee depends on control, not the contract. The IRS test, state rules, 1099s, payroll registration and the cost of getting it wrong.
- ComplianceFirst-year compliance calendar for a Delaware C-corpDelaware franchise tax, 1099s, the federal return, payroll filings, state annual reports and sales tax: the deadlines a young C-corp misses most, by month.
More of the New Jersey guide
- AccountingAccounting and state tax in New JerseyCorporate tax, conformity to federal rules, apportionment and what it does to your books
- ReceivablesReceivables and sales tax in New JerseySales tax registration, economic nexus, whether SaaS is taxable, and collecting from customers
- PayrollPayroll taxes and employer rules in New JerseyWithholding, unemployment insurance, paid leave, minimum wage and the rules on paydays
- ComplianceCompliance and filings in New JerseyRegistering to do business, annual reports, franchise tax and the filing calendar
- AdvisoryAdvisory: credits and decisions in New JerseyCredits, incentives and the decisions that are cheaper to get right the first time
Sources
Checked against each agency’s own page on . Rates and thresholds change, usually on January 1.
General information for US companies, not tax, legal or accounting advice for yours. Rules and thresholds change; confirm the specifics with a CPA or the agency before you act on them.