Does my Social Security count as income for tax purposes?


Q. My pension is $87,000 and Social Security is $27,000 a year. Does the Social Security count as income?
— Taxpayer

A. There are a couple of things to consider here.

First, let’s discuss Social Security.

For federal purposes, you would be taxed on 85% of your Social Security benefits, said Neil Becourtney, a certified public accountant and tax partner with CohnReznick in Holmdel.

But for New Jersey gross income tax purposes, Social Security benefits are never subject to tax, he said.

“Accordingly, as a single taxpayer, you will be able to claim a pension exclusion of $75,000 since your reportable gross income is below $100,000, leaving you with $12,000 of New Jersey gross income before deductions and exemptions,” he said.

Your income can be further reduced by up to $15,000 in real estate taxes paid on a principal residence and by certain medical expenses exceeding 2% of your $12,000 of gross income, Becourtney said.

“Every taxpayer gets a $1,000 personal exemption, and if you have attained age 65 you are entitled to a second personal exemption of $1,000,” he said. “As the first $20,000 of taxable income is only subject to New Jersey tax at a rate of 1.4%, the tax that you end up incurring, if any, will be minimal.”

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This story was originally published on Sept. 8, 2022. presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.