Partly taxed
How New Jersey taxes retirement income
New Jersey does not tax Social Security. Pensions, annuities and IRA withdrawals can be excluded from age 62, or at any age if you are disabled, as long as your total income is $100,000 or less. Married couples filing jointly can exclude up to $100,000, single filers up to $75,000, and married people filing separately up to $50,000.
Between $100,000 and $150,000 of total income, a partial exclusion applies, so the break shrinks rather than disappearing all at once. Above $150,000, pensions and IRA withdrawals are fully taxed. New Jersey also has an “other retirement income” exclusion for people who did not use up the pension exclusion and have little or no wage income.
For most retired teachers and public workers receiving TPAF or PERS pensions, the exclusion covers the whole pension. The bigger tax cost in New Jersey is property tax, which is the highest in the country, though the Senior Freeze and ANCHOR programs help homeowners 65 and older.
Questions
Does New Jersey tax TPAF pensions?
Not for most retirees. At 62 and older with income of $100,000 or less, up to $100,000 of pension income on a joint return is excluded.
Are IRA withdrawals covered?
Yes. IRA withdrawals count toward the same pension exclusion.
Does New Jersey tax Social Security?
No. Social Security is fully exempt.