20 Nov I have a pension from NYC. Is it taxable if I move to N.J.?

Q. I retired with a New York City pension of $50,000 annually. My Social Security income is about $23,760 annually. I am thinking of moving to New Jersey. Does my income exclude me from the taxes if I move?
— Retired

A. The Garden State is waiting for you with open arms.

And a friendly tax policy for your situation.

Your pension, while you’re living in New York, is not taxable, said Michael Maye, a certified financial planner and certified public accountant with MJM Financial in Gillette.

He said if you become a New Jersey resident, your pension wouldn’t automatically be excluded from taxes as it is by New York State.

But that’s where the New Jersey pension exclusion comes in, subject to eligibility.

“The requirements are the individual must be 62 years or older and their total income is must be less than $100,000,” he said.

Then, the exclusion is $75,000 for an individual and $100,000 for those who are married and file a joint tax return.

And, there is a phase-out for those with total income between $100,001 and $150,000, Maye said.

“The phase out was added to address the cliff nature of qualifying for the pension income exclusion,” he said. “If you were $1 over, in the past, it totally disqualified one from receiving any New Jersey pension income exclusion.”

As a reminder, New Jersey doesn’t tax Social Security income, so it is excluded from the state’s definition of total income, Maye said.

“So if the reader’s total income is less than $100,000 and they are over age 62, then their entire New York City pension of $50,000 would be excludable under New Jersey pension income exclusion,” Maye said.

But if in the future, you were to receive annual Required Minimum Distributions from a 401(k) or IRA that pushed your income above the $150,000 limit, your entire New York City pension would be taxable in New Jersey, Maye said.

“Also, having a one-time non-recurring source of income in any given year such as a large capital gain could make their New York City pension taxable for that year,” Maye said. “It is a year-by-year calculation.”

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This story was originally published on Nov. 20, 2023.

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