06 Sep How will my pension be taxed in New Jersey?
Q. I just moved to New Jersey from Florida. I have a pension from New York State for $55,000. How will my pension be taxed in New Jersey?
A. Welcome to the Garden State!
You’ve got a few things to consider.
First, generally, your retirement income is subject to income tax by the state in which you are a resident, said Roy Williams, a chartered financial consultant and CEO of Prestige Wealth Management in Flemington and Millburn.
So you will be taxed by New Jersey.
The good news is that the state has a retirement income exclusion if you meet certain criteria, Williams said.
To be eligible, you and/or your spouse or civil union partner, if filing jointly, must be 62 or older or disabled as defined by Social Security guidelines on the last day of the tax year, and your total income for the entire year is less than $100,000.
If you qualify, singles, heads of households, widowers and surviving civil union partners can exclude $60,000 of income in 2019. Those who are married filing jointly get an exclusion of $80,000, and those married filing separately can exclude $40,000 in 2019.
The amounts will go up for 2020, Williams said.
He notes that retirement income for New Jersey purposes includes pension income, annuity income, 401(k) or IRA withdrawals. Also note that Social Security income is 100 percent exempt from New Jersey taxes.
“For example, if you are 63, single and in 2019 your total income is less than $100,000, your entire pension benefit will not be subject to state income taxes,” Williams said. “However, if your total income is $100,001 or higher, none of your retirement income will be excluded from income taxes.”
That’s the pension exclusion cliff.
Email your questions to moc.p1582112946leHye1582112946noMJN1582112946@ksA1582112946.
This story was originally published on Sept. 6, 2019.
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