14 Sep Do I owe tax on my deceased husband’s pension?

Q. My husband died in February 2024. He was a teacher for the a public school. As his beneficiary, I received his pre-tax contribution to his pension, plus interest. I know I have to pay federal tax on it. Do I also have to pay tax to New Jersey?
— Widow

A. We’re sorry to hear about your husband.

Whether you owe tax will depend on the specifics of your age, income level and other factors.

In 2018, New Jersey began what’s called the “pension exclusion” for state income taxes, said Bernie Kiely, a certified financial planner and certified public accountant with Kiely Capital Management in Morristown.

To qualify, individuals must be 62 years or older or disabled. They must also be residents of New Jersey for the entire tax year, he said

For the 2025 tax year, the total income for the full exclusion is $150,000 for married couples filing jointly, $100,000 for single filers and $75,000 for married individuals filing separately, he said.

“If your total income is $100,000 or less, you can exclude the full amount of your taxable pension, annuity and IRA withdrawals,” Kiely said. “For total incomes between $100,001 and $150,000, a percentage of the reported taxable pension income can be excluded.”

And finally, taxpayers with total income exceeding $150,000 are not entitled to any pension exclusion.

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This story was originally published in September 2025.

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