Updated October 24, 2026. Quick answer: Line 20b of the 2025 NJ-1040 is where you report the part of a pension, annuity or IRA distribution that is not taxed again because it represents contributions you already paid tax on. It is the counterpart of line 20a, the taxable part. The booklet sends you to a worksheet depending on the method you use, and line 20b is left out of the line 27 total.
What this line asks
Line 20b on the NJ-1040 is the excludable pension, annuity and IRA line. The booklet opens its instruction with “Enter the excludable portion of any distribution you received from a contributory pension, annuity, or IRA.” It then explains what that portion is: “This is the portion of the total distribution that was not reported on line 20a.” The taxable portion is the subject of NJ-1040 line 20a.
The booklet adds a short description of the amount: “This amount represents your previously taxed contributions.”
Who it applies to
The booklet limits line 20b to one kind of payment. The instruction speaks of a distribution received “from a contributory pension, annuity, or IRA”. It prints no age, filing status or income test for this line. For the retirement-income exclusion that depends on age and income, see NJ-1040 line 28a.
For the wider picture of how the state treats these payments, see whether New Jersey taxes pensions, New Jersey 401(k) and IRA withdrawals and New Jersey annuity income.
What the instructions say to enter
The booklet gives one sentence per method. Which row applies depends on how you recover your contributions.
| Step | What the booklet says |
|---|---|
| Step 1 | “Enter the excludable portion of any distribution you received from a contributory pension, annuity, or IRA.” |
| Step 2 | “This is the portion of the total distribution that was not reported on line 20a.” |
| Step 3 | “This amount represents your previously taxed contributions.” |
| Three-Year Rule Method | “Include the full amount received until you have recovered all of your contributions.” |
| General Rule Method | “Include the amount from Worksheet B, line 5.” |
| IRA withdrawal | “Include the amount from Worksheet C, line 8.” |
| Converted IRA | “If you converted an existing IRA to a rollover Roth IRA, report the excludable portion on this line.” |
| Lump-sum distribution | “If you received a lump-sum distribution from a pension, annuity, or IRA, report the excludable portion on this line.” |
The booklet also points to further reading: “For more information, see GIT-1 & 2, Retirement Income.”
Where the result goes next
The booklet’s carry instruction for the IRA case is “Include the amount from Worksheet C, line 8.” and for the General Rule Method it is “Include the amount from Worksheet B, line 5.” The instruction for the total income line says “do not include lines 16b and 20b”, so line 20b is not added into NJ-1040 line 27.
Your payer reports distributions on Form 1099-R. 1099-R boxes explained, Form 1040 line 5a and 5b and Form 1040 line 4a and 4b show how the federal return treats the same payments.
Part-year residents
The booklet prints a paragraph for part-year residents on this line: “Include only the amounts you received while you were a resident of New Jersey.”
Edition and line numbers
This page reads the 2025 NJ-1040 New Jersey Resident Return booklet, the current file the New Jersey Division of Taxation served on 2026-10-24. Check the edition printed on your own form and use that edition’s line numbers.
Common mistakes
- Putting the taxable part of a distribution on line 20b. The booklet says the excludable amount is “the portion of the total distribution that was not reported on line 20a.”
- Adding line 20b into total income. The line 27 instruction says “do not include lines 16b and 20b”
- Counting amounts received before moving to New Jersey as a part-year resident. The booklet says “Include only the amounts you received while you were a resident of New Jersey.”
Related: New Jersey retirement taxes, whether New Jersey taxes pensions, New Jersey 401(k) and IRA withdrawals, New Jersey annuity income, and 1099-R boxes explained.
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Answer againSources
- 2025 NJ-1040 New Jersey Resident Return booklet (instructions and forms), New Jersey Division of Taxation: www.nj.gov
- 2025 Form NJ-1040 New Jersey Resident Income Tax Return, New Jersey Division of Taxation: www.nj.gov
Read from the state revenue documents linked above on October 24, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer or the state revenue department is the right place to confirm anything consequential.