Updated October 5, 2026. Quick answer: Yes, with a break. The instructions give a pension and retirement exclusion of up to $75,000 (single) or $100,000 (joint) to filers who are “age 62 or older or blind/disabled as defined by Social Security” and whose income is $150,000 or less. Annuity income above the exclusion is taxed on the graduated schedule.
State retirement-income forms, line by line: NJ-1040 pension exclusion.
How New Jersey treats annuity income
| Item | What the documents say |
|---|---|
| Treatment | Taxable in New Jersey, with a pension and retirement exclusion for age 62 or older |
| Maximum exclusion, income $0 to $100,000 | $75,000 for single filers; $100,000 for joint filers |
| Income above $100,000 | A percentage of line 27 income; no exclusion above $150,000 |
| Contributory plans | “Part of your pension is excludable and part is taxable every year” under the General Rule method |
| 2025 rates | From .014 (1.4%) on the first $20,000 of taxable income to .1075 (10.75%) on income of $1,000,000 and over |
A $24,000 example
A single filer aged 62 or older with line 27 income of $100,000 or less can exclude up to $75,000, so $24,000 of taxable annuity income is wholly inside the exclusion and adds $0 of New Jersey tax.
Without the exclusion, $24,000 taxed wholly at the lowest 2025 rate, 1.4%, would add $336; at the top rate, 10.75%, $2,580. Your own figure depends on your bracket.
What changes in 2026
The 2025 booklet is the latest New Jersey instruction read, and it prints no 2026 rate schedule or exclusion change.
Federal rules
The state’s treatment sits on top of the federal one. The IRS explains the federal side in Topic no. 410, Pensions and Annuities and Publication 575, Pension and Annuity Income.
Related: whether New Jersey taxes pensions, how New Jersey taxes retirement income, annuity income tax by state, how a surrendered annuity is taxed, and pension and annuity decisions.
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Answer againSources
- 2025 NJ-1040 Resident Return Instructions Booklet (New Jersey Division of Taxation): https://www.nj.gov/treasury/taxation/pdf/current/1040i.pdf
Sources: the primary documents linked above, read on October 5, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.