Updated October 29, 2026. Quick answer: Taxable first, then partly excluded. The 2025 NJ-1040 booklet lists “Civil Service pensions and annuities, even if based on” military credit among taxable pensions, and the line 28a exclusion needs age 62 or older (or blind or disabled) and line 27 income of $150,000 or less.
What New Jersey does with a FERS or CSRS annuity
| Question | What the New Jersey documents say |
|---|---|
| What the source says | The NJ-1040 instructions list Civil Service pensions and annuities received from the U.S. Office of Personnel Management, even if based on credit for military service, as taxable retirement income reported on line 20a, the same as other government and private pensions. |
| Amount or limit | Line 28a is the lesser of the taxable pension on line 20a (with other retirement income) or the amount from the booklet chart. When line 27 income is $100,000 or less the chart cap is $100,000 for joint filers, $75,000 for single, head of household and qualifying widow(er), and $50,000 for married filing separately; above $100,000 the chart replaces the cap with a percentage of line 20a, and income over $150,000 does not qualify. |
| Age or other test | Age 62 or older, or blind or disabled as defined by Social Security guidelines, on the last day of the tax year, with income on line 27 of $150,000 or less. |
| Change for 2026 | No 2026 change is printed in the state documents cited here. |
In the New Jersey documents’ own words
- “These are received from the U.S. Office of Personnel Management.” (2025 NJ-1040 New Jersey Resident Return (instruction booklet))
- “Federal, state, and local government, and teachers” (2025 NJ-1040 New Jersey Resident Return (instruction booklet))
- “age 62 or older or blind/disabled as defined by Social Security” (2025 NJ-1040 New Jersey Resident Return (instruction booklet))
- “Your income on line 27 is $150,000 or less” (2025 NJ-1040 New Jersey Resident Return (instruction booklet))
- “Employee contributions to federal Thrift Savings Funds” (2025 NJ-1040 New Jersey Resident Return (instruction booklet))
- “and federal pensions are all treated the same as private” (GIT-1 and 2 Retirement Income (Tax Topic Bulletin, January 2026))
How this differs from other pensions in New Jersey
The booklet places Civil Service pensions in the same taxable list as private sector pensions and federal, state, and local government pensions, so the federal civilian pension gets no separate rule. U.S. Military pensions are the exception, listed as nontaxable. See also Does New Jersey tax pensions? and military retirement pay.
FERS, CSRS and your TSP
The booklet says employee contributions to federal Thrift Savings Funds are included in New Jersey taxable income, and it lists 401(k) Plan distributions as taxable retirement income, but it does not set a separate rule for TSP withdrawals. For the Thrift Savings Plan itself, see state tax on TSP withdrawals and the TSP calculator.
What the New Jersey documents leave open
The booklet sets no separate rule for TSP withdrawals, and the phase-out percentages in the booklet chart are not summarized here. No 2026 booklet exists yet.
Common mistakes
- Assuming the exclusion survives higher income. It applies only when line 27 income is $150,000 or less.
- Confusing a federal civil service pension with a military pension. The booklet lists U.S. military pensions as nontaxable and civil service pensions as taxable.
Related: Does New Jersey tax pensions?, New Jersey military retirement pay, New Jersey retirement deduction line by line, and FERS, TSP and Social Security sequencing.
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Answer againSources
- 2025 NJ-1040 New Jersey Resident Return (instruction booklet): https://www.nj.gov/treasury/taxation/pdf/current/1040i.pdf
- GIT-1 and 2 Retirement Income (Tax Topic Bulletin, January 2026): https://www.nj.gov/treasury/taxation/pdf/pubs/tgi-ee/git1&2.pdf
Read from the state documents linked above on October 29, 2026. General information, not tax advice.