Updated October 7, 2026. Quick answer: Only if you live there. New Jersey’s nonresident instructions say pension, annuity, and IRA withdrawal income is “not taxable to nonresidents.” Residents are taxed on it, with exclusions that depend on age and income.
How New Jersey treats a pension earned elsewhere
| Item | What the state documents say |
|---|---|
| Nonresidents | The NJ-1040NR instructions tell filers to enter nothing in column B for pension, annuity, and IRA withdrawal income, and say that income is not taxable to nonresidents. Income received as a nonresident from New Jersey sources is taxable, and military pensions are not taxable to a nonresident. This row rests on the NJ-1040NR instructions. The same wording appears for line 22 and for line 28a. |
| Residents with a pension earned elsewhere | The NJ-1040 instructions say retirement income such as pensions, annuities, and certain IRA withdrawals is taxable in New Jersey, and the New Jersey amount may differ from the federal amount. The pension and retirement exclusion on line 28a applies if the filer was 62 or older, or blind or disabled, and income on line 27 is $150,000 or less. The maximum is $100,000 for joint filers, $75,000 for single, head of household, and qualifying widow(er) filers, and $50,000 for married filers filing separately, when income is $100,000 or less, and smaller shares of the pension apply at higher incomes. This row rests on the NJ-1040 resident instructions. The instructions list Social Security, Railroad Retirement, and U.S. military pensions as nontaxable retirement income. |
| Part-year residents (year of a move) | On the resident return NJ-1040 a part-year resident includes only the taxable pension amounts received while a resident. On the nonresident return NJ-1040NR the filer reports only income earned while a nonresident, and the pension and retirement exclusions are prorated by the months of nonresidency, where 15 days or more counts as a month. For the NJ-1040 exclusion the income for the entire year must have been $150,000 or less. This row rests on both sets of instructions. The source says: “you received while you were a resident of New Jersey.” A person who was a resident for part of the year may need to file both returns. |
| Rate | For 2025 the NJ-1040 tax rate schedules print graduated rates as decimals, from .014 at the lowest bracket to .1075 at the top bracket. The schedules sit near the end of the instruction booklet. |
| Return to file | Residents file Form NJ-1040. Nonresidents and part-year residents with income from New Jersey sources file Form NJ-1040NR. A part-year resident may also need to file the resident return for the resident period. |
A $40,000 move-year example
A retiree receives $40,000 of pension in the year of a move: $20,000 before the move date, as a New Jersey resident, and $20,000 after leaving.
The first $20,000 can be taxed by New Jersey; the rest is outside its reach under the federal rule below. Taxed wholly at the lowest printed rate, .014 (1.4%), the tax on it is computed as $20,000 x 0.014 = $280; taxed wholly at the highest, .1075 (10.75%), it is computed as $20,000 x 0.1075 = $2,150. The real figure falls between these bounds before any exclusion or credit. Federal tax still applies.
The federal rule that protects a nonresident
4 U.S.C. 114(a) bars a state income tax on retirement income of an individual “who is not a resident or domiciliary of such State”. Retirement income means certain plan payments made as a “series of substantially equal periodic payments”, so not every payment is covered.
Related: how New Jersey taxes retirement income, whether New Jersey taxes pensions, New Jersey to Arizona retirement taxes, New Jersey to Delaware retirement taxes, out-of-state pension tax by state, and deferred compensation lump sums after a move.
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Answer againSources
- 2025 NJ-1040 New Jersey Resident Return instructions (NJ Division of Taxation): https://www.nj.gov/treasury/taxation/pdf/current/1040i.pdf
- 2025 NJ-1040NR Nonresident Return instructions (NJ Division of Taxation): https://www.nj.gov/treasury/taxation/pdf/current/1040nri.pdf
- 4 U.S.C. 114, Limitation on State income taxation of certain pension income (U.S. Government Publishing Office, 2023 edition): https://www.govinfo.gov/content/pkg/USCODE-2023-title4/html/USCODE-2023-title4-chap4-sec114.htm
Sources: the primary documents linked above, read on October 7, 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.