Updated September 5, 2026. Quick answer: New Jersey does not tax military pensions at all, but most other pensions, annuities, and IRA withdrawals only become tax free through an income gated Retirement Income Exclusion that disappears completely once a taxpayer’s total income exceeds $150,000, so state, local, federal, and private pensions can all be fully taxable for higher income retirees.
Confidence note: high. This page is scoped to pension, IRA and 401(k) taxation specifically. For the state’s full retirement-tax picture (Social Security, tax rates, estate and probate), see how New Jersey taxes retirement income generally.
How pensions and retirement-account withdrawals are taxed
| Public (state/local government) pensions | State and local government pensions, including teachers’ pensions, are taxable income in New Jersey. Retirees who are 62 or older, or disabled under Social Security’s definition, can use the Retirement Income Exclusion described below to shelter some or all of that income if their total income is $150,000 or less. |
|---|---|
| Private (employer) pensions | Private sector employee pensions, annuities, and Keogh plan distributions are taxable income in New Jersey and are eligible for the same age gated, income gated Retirement Income Exclusion described below. |
| Federal government pensions (FERS/CSRS) | The New Jersey Division of Taxation lists federal civilian government pensions as taxable income, grouped together with state, local, and private pensions, and these are eligible for the same Retirement Income Exclusion if the taxpayer qualifies by age and income. |
| Military retirement pay | Military pensions from the Army, Navy, Air Force, Marines, or Coast Guard are not taxable in New Jersey and do not depend on the age or income limited exclusion that applies to other pensions. |
| IRA and 401(k)/403(b) distributions | Taxable IRA and 401(k) withdrawals are taxable income in New Jersey and are eligible for the same Retirement Income Exclusion as pensions and annuities if the taxpayer qualifies by age and income. |
| General retirement-income exclusion | New Jersey’s Retirement Income Exclusion is available to residents who were 62 or older, or disabled under Social Security’s definition, on the last day of the tax year, with total income of $150,000 or less. If total income is $100,000 or less, the maximum exclusion is $100,000 for married or civil union couples filing jointly, $75,000 for single filers, heads of household, or qualifying widow(er)s, and $50,000 for married or civil union partners filing separately. For total income between $100,001 and $125,000, taxpayers may exclude 50 percent of taxable pension income if married filing jointly, 37.5 percent if single, head of household, or qualifying widow(er), or 25 percent if married filing separately. For total income between $125,001 and $150,000, the percentages drop to 25 percent, 18.75 percent, and 12.5 percent respectively. Above $150,000 in total income, no Retirement Income Exclusion is available at all. A separate Other Retirement Income Exclusion, using Worksheet D, exists for otherwise qualifying taxpayers whose wage and business income totals $3,000 or less. |
Coordinate this with your overall retirement plan
An adviser can help weigh how much of a pension or IRA withdrawal to take this year, whether a Roth conversion makes sense before or after a move, and how state tax interacts with the rest of your plan, but that does not replace the numbers in your own return.
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Social Security
New Jersey does not tax Social Security benefits at all, but a companion page on this site covers Social Security taxation in detail. Social Security has its own rules in every state; see the full breakdown in how New Jersey taxes retirement income generally.
Statute and sources
Governing citation: N.J. Div. of Taxation, NJ Income Tax, Retirement Income (njit6.shtml) and Retirement Income Exclusions (njit7.shtml); Tax Topic Bulletin GIT-1&2, Retirement Income.
- New Jersey Division of Taxation, NJ Income Tax, Retirement Income
- New Jersey Division of Taxation, Retirement Income Exclusions (dollar amounts and phase out chart)
Read September 5, 2026.
Related: how New Jersey taxes retirement income generally · does New Jersey tax Roth conversions? · Roth conversion taxes, all 51 jurisdictions.
General information drawn from each state’s own published statutes and revenue-department guidance, not legal, tax or financial advice. Figures and exemption amounts are current as of the date in the quick answer, are set by state law, and can change by future legislation; any pending bill named on this page is not yet law. This page cannot see your own return, which governs. We are not a law firm, a tax adviser, or a fiduciary, and this is not personalized advice.