14 May Will New Jersey tax my husband’s police pension?

Q. My husband and I moved from New Jersey to Massachusetts two years ago. He has been receiving a retired police pension from New Jersey Division of Pensions and Benefits since 2004. Would his pension be taxed in New Jersey or Massachusetts?
— Retired

A. We’re sorry to hear you left New Jersey.

The law regarding pensions is simple.

You pay tax on the pension, regardless from which state it originated, to the state in which you live, said Michael Karu, a certified public accountant with Levine, Jacobs & Co. in Livingston.

“For pensions and other retirement income received on or after Jan. 1, 1996, federal law prohibits any state from taxing pension income unless you are a resident of that state,” he said. “In your case, the pension is from a New Jersey employer and you live in Massachusetts. New Jersey may not tax the pension, but it is subject to tax in Massachusetts because you are a resident of Massachusetts.”

But if you moved back to New Jersey, depending on your age and income level, the pension could be tax-free. That’s because New Jersey now has a pension exclusion. If you’re 62 and older and your total income is less than $100,000, you won’t owe income taxes to the state.

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This story was originally published on May 14, 2020.

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