New Jersey expects to issues safe levels for three common toxic chemicals in drinking water by the end of the year, putting the state—and its water utilities—ahead of the federal government in setting strict standards for the chemicals.

“No other state is doing what we’re doing,” Lawrence Hajna, spokesman for New Jersey’s Department of Environmental Protection, told Bloomberg Environment.

Once widely used in nonstick cookware, fire-retardant upholstery coatings, and other consumer products, the chemical compounds—known as per- and polyfluoroalkyl substances (PFAS)—don’t break down easily in the environment and can remain in the body for a long...