Temporary Disability benefits (including family leave insurance benefits) are not subject to the New Jersey state income tax according to NJ Dept of Taxation FAQs.
In New Jersey, temporary disability benefits are treated in the same manner as third-party sick pay. If you receive these types of benefits, they are subject to Social Security withholdings. At the end of the year, you will receive a W-2 listing the amount of sick benefits received, since they are taxable under federal law.
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