31 Aug Is my income tax-free if I move to N.J.?
Q. I recently retired as a New York City employee at the age of 55. I am thinking about moving to a 55+ community in New Jersey but I am hearing mixed messages on taxes. I was told by a friend that if my income is less than $100,000, I would not pay tax. My income will be about $87,000. Since I retired from the city I would only be required to pay federal taxes in New York. I am concerned that the tax burden might prevent me from making the move.
— Moving, maybe
A. Congratulations on your retirement.
New Jersey has some tax benefits you may get to enjoy — someday.
It’s commonly called the pension exclusion, and it allows for taxpayers whose total income is less than $150,000 to deduct all or part of their retirement income, which includes pension, annuities and IRA distributions, said Steven Gallo, a certified public accountant and personal financial specialist with U.S. Financial Services in Fairfield.
If your total income is $100,000 or less and you are married and filing a joint return, you may deduct up to $100,000 of retirement income, he said. If you are single, you can deduct up to $75,000 of retirement income from your total income, he said.
And if your total income is between $100,000 and $150,000, there is a phase-out of the allowable exclusion, he said.
“There is one other requirement, and this is the one which will give you an issue,” Gallo said. “You and your spouse, if applicable, must be at least 62 years old or be disabled by Social Security standards to qualify.”
“This means that at your current age you would not qualify for another seven years,” he said.
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This story was originally published on Aug. 31, 2023.
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