02 Sep If I move to N.J., will the state tax my pension?
Q. I retired in 2019 from the New York City Department of Corrections. I am thinking about relocating to New Jersey. Currently, my pension is only taxed on the federal level. My pension is just over $72,000 yearly. Will my pension be taxed in New Jersey?
A. We may have some good news for you.
Taxes owed will depend on several factors.
First, New Jersey does indeed tax pensions.
State and local government, teachers’, Keogh plans and federal pensions are treated the same as private sector employee pensions and annuities, said Michael Karu, a certified public accountant with Levine, Jacobs & Co. in Livingston.
But the taxable amount is dependent on your age, marital status and total income, he said.
It’s called the pension exclusion.
“For example, if you are single, over 62, and your total income is under $100,000, it would not be taxable because the maximum excludable pension income is $75,000,” he said. “If your total income is between $100,000 and $125,000, then 37.5% of your pension is excludable.”
Then, if your total income is between $125,000 and $150,000, then 18.75% of your pension is excludable, he said.
Once your total income exceeds $150,000, your pension is fully taxable, he said.
It’s important to note that just like New York, Social Security benefits are not taxed in the state of New Jersey.
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This story was originally published on Sept. 2, 2022.
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