New Jersey Retirement Taxes (2026): Exclusions & Inheritance

2026 edition · statute-cited · part of Clear Money Guide’s 51-state retirement tax series. This guide covers state taxes on retirement income and estate transfers; property and sales taxes vary by county and are outside its scope.

Updated July 24, 2026. Quick answer: New Jersey is friendlier to moderate-income retirees than its reputation suggests — and harsher at two specific boundaries. Social Security is never taxed (and doesn’t count toward the exclusion test). At 62+, the pension/retirement-income exclusion shelters up to $100,000 (married filing jointly) — but it phases down in percentage tiers above $100,000 of income and vanishes entirely at $150,001, a hard cliff where one extra dollar of income can add thousands in tax. And at death, New Jersey levies an inheritance tax on siblings, nieces, nephews, friends and partners — though spouses, children and grandchildren (Class A) inherit tax-free.

The pension exclusion, tier by tier (N.J.S.A. 54A:6-10, 54A:6-15)

Total NJ income (excl. Social Security)	Exclusion — MFJ	Single
Up to $100,000	Full, up to $100,000	up to $75,000
$100,001 – $125,000	50% of pension income	37.5%
$125,001 – $150,000	25% of pension income	18.75%
$150,001+	$0 — the cliff: no exclusion at all

Worked examples (MFJ, 62+): $90,000 of pension/IRA income and any amount of Social Security → entire $90,000 excluded, $0 NJ tax on it. At $130,000 of income, 25% of pension income is excludable. At $151,000, nothing is — the whole amount is taxed at New Jersey’s graduated rates (1.4%–10.75%). Managing withdrawals around the $150,000 line is one of the highest-leverage planning moves in the state. Military pensions and survivor benefits are fully exempt at any age and income (N.J.S.A. 54A:6-26).

The inheritance tax, by heir class

New Jersey’s estate tax is gone (repealed for deaths on/after January 1, 2018) — but the inheritance tax survives, keyed to who inherits:

Class	Who	Rate
A	Spouse/civil-union/domestic partner, parents, grandparents, children, grandchildren, stepchildren	Exempt
C	Siblings; spouse of a child	First $25,000 exempt; then 11% to $1.1M, rising to 16% above $1.7M
D	Everyone else (nieces/nephews, friends, unmarried partners)	15% on first $700,000; 16% above
E	Charities, religious/educational institutions, NJ government	Exempt

Worked example — a $500,000 bequest to: your daughter: $0 · your brother: $52,250 (11% above the $25,000 exemption) · your niece or unmarried partner: $75,000 (15% from dollar one). As in Pennsylvania, who inherits is the tax strategy. Full national context: inheritance tax by state.

Probate costs

Executor commissions are statutory: 5% of the first $200,000 of corpus, 3.5% to $1M, 2% above (N.J.S.A. 3B:18-14), plus a 6% income commission; attorney fees are reasonable-basis. Surrogate’s Court filing is cheap — roughly $100–$200 all-in. Small estates (intestate): $50,000 for a surviving spouse/partner, $20,000 for other heirs with consent (N.J.S.A. 3B:10-3, -4). Context: probate cost by state · will vs. trust calculator.

Is New Jersey a good state to retire in for taxes?

Conditional — more than almost any state, the answer depends on your income band and your heirs. Under $100,000 of non-Social-Security income with Class A heirs: genuinely favorable — most retirement income escapes tax entirely and nothing is owed at death. Above the $150,000 cliff, or with siblings/nieces/partners as heirs, the picture flips hard. New Jersey rewards retirees who plan withdrawals and beneficiary designations deliberately — and penalizes those who don’t.

New Jersey vs. common alternatives

State	Social Security	Pension / 401(k) / IRA	Estate tax	Inheritance tax
New Jersey	Not taxed	Exclusion up to $100,000 MFJ at 62+ (income-tested)	None (repealed 2018)	Yes — Class C/D heirs
Pennsylvania	Not taxed	Not taxed (retirement-age distributions)	None	Yes — 0/4.5/12/15% by heir class
Delaware	Not taxed	Exclude up to $12,500/person at 60+	None (repealed 2018)	None
Florida	Not taxed	Not taxed (no income tax)	None	None

Comparison rows summarize general rules; see our 51-state retirement tax table for statute-cited detail.

Considering a Roth conversion? The converted amount is taxed as ordinary income in the year you convert, and New Jersey may treat it differently from the retirement income above — see how all 51 jurisdictions tax Roth conversions.

Finding a financial advisor in New Jersey

Per the SEC’s July 2026 Investment Adviser roster, New Jersey has 383 SEC-registered advisory firms (#10 nationally) managing $6.07 trillion (#6 by AUM). Full breakdown: New Jersey advisor statistics. A cross-state move is exactly when fee structures deserve a second look — see the fee-drag calculator.

Disclosure: the button above routes to an advertising partner and Clear Money Guide may earn a referral fee. See our Affiliate Disclosure.

Thinking about moving?

Four taxes change when you move state in retirement, not one: income tax on withdrawals, state estate tax, state inheritance tax, and what probate costs your heirs. Corridor comparisons involving New Jersey:

Leaving New Jersey? See leaving New Jersey in retirement.

Compare any two states with the retirement tax comparison tool, or browse all corridors at the relocation hub.

What probate costs in New Jersey

New Jersey uses a hybrid standard — a statutory ceiling or floor with reasonableness applied inside it — so the fee has a bound but not a fixed number. Whether its small-estate route of $50,000 reaches real property is not clearly stated in the statute, so treat that as unresolved rather than permission. Full detail with the governing statute, the court filing fee and the threshold: New Jersey probate cost. To price a specific estate, use the probate cost calculator.

Cite or share this guide

Suggested citation: Clear Money Guide, “New Jersey Retirement Taxes (2026 edition),” statute-cited; clearmoneyguide.com/new-jersey-retirement-taxes/. Free to cite with attribution and a link. Data verified July 23–24, 2026 against state statutes, session laws, and revenue-department guidance.

New Jersey Retirement Taxes (2026): The Pension Exclusion, the $150,000 Cliff, and the Inheritance Tax