03 May What kind of income does the pension exclusion consider?

Q. For the pension exclusion, does it consider gross income before any deductions or the adjusted gross income?
— Taxpayer

A. The pension exclusion, if you qualify, could save you from owing any income tax in New Jersey.

Not a bad benefit.

The law used to have a strict cutoff, but more recently, a phase-in was added to the law.

“If you were eligible, if your total income is $100,000 or less, your taxable pension can be excluded,” said Evan Drury, a chartered financial consultant with U.S. Financial Services in Fairfield. “If your income is up to $125,000, you can exclude 50% and if it’s up to $150,000, you can exclude 25%.”

If your income is higher than 150,000, you’re not eligible, he said.

What kind of income? Gross income, Drury said.

You can read more on the state’s website.

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This story was originally published in April 2024.

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