12 Jul What income counts for property tax benefits?

Q. My spouse worked for the state of New Jersey and receives a pension. We have to use the General Rule as we don’t qualify for the 3-Year Rule method. Our NJ1040 has an amount on line 20b for the portion of the pension that has already been taxed by the state while working. Does this have to be included in income since taxes were already paid and if so where on the application would this amount be recorded? In 2025 we took a Roth IRA distribution. Roth is not taxable and is not recorded on the tax return. Since it is a Roth, the taxes were paid in the year of the contribution. Does this have to be included in income and if so where? Note principal has already been taxed. How would the earnings of the investment be calculated on partial withdrawal?
— Senior

A. The booklet you refer to is the Application for Property Tax Relief, PAS-1.

That’s what you file to receive benefits from any of the three state property tax relief programs – the Senior Freeze, ANCHOR and Stay NJ.

Lots of people have been confused about what income counts for PAS-1.

For completing the income calculation worksheets, the Form PAS-1 instructions state to enter your taxable pensions, annuities and IRA withdrawals, noting that the New Jersey taxable amount may differ from the federal amount, said Neil Becourtney, a certified public accountant and tax director with Smolin, Lupin & Co. in Red Bank.

“You referenced line 20b, which is the excludible pension, annuity and IRA distributions representing previously taxed contributions,” he said. “The Form PAS-1 instructions expressly state to enter the amount of any qualified distribution from a Roth IRA.”

That’s right. Some income that is not taxable does count for income on the application.

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This story was originally published in July 2026. 

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