Updated October 16, 2026. Quick answer: New Jersey makes you report income in respect of a decedent on your own return when you receive it, and its pension and other retirement income exclusions are written around the filer’s own age (62 or older) and income, so the instructions do not say a beneficiary qualifies.
New Jersey at a glance
| Item | What the documents say |
|---|---|
| How the state taxes retirement-account income | Taxed as income; pension and other retirement income exclusions with an age and income test |
| Do the state’s documents address beneficiaries? | Addressed in part: income in respect of a decedent is reported by the person who receives it |
| Retirement exclusion or credit | Up to $100,000 joint or $75,000 single, phased down at income of $100,001 to $150,000 and none above $150,000; age 62 or older or blind or disabled |
| Rate in the documents read | The 2025 rate schedules print .1075 for income of $1,000,000 and over |
| State inheritance or estate tax | New Jersey has an inheritance tax: see CMG’s New Jersey inheritance tax page |
| Changed for 2026? | The documents read are the 2025 instructions and do not address a 2026 change |
What the New Jersey documents say
The NJ-1040 instructions say that if you had the right to receive income the deceased person would have received and it was not on the decedent’s final return, you “must report it on your own return when you receive it”. They do not name inherited IRAs.
The exclusion text is written around the filer: it applies when “age 62 or older or blind/disabled as defined by Social Security guidelines” and when “Your income on line 27 is $150,000 or less”. The maximum exclusion is $100,000 for married couples and civil union partners filing jointly and $75,000 for single filers, reduced at income of $100,001 to $150,000.
The instructions also say that “pensions, annuities, and certain IRA withdrawals is taxable in New Jersey”. The 2025 rate schedules print .1075 for income of $1,000,000 and over.
The federal 10-year rule and your New Jersey tax year
IRS Publication 590-B says a beneficiary may be required to take the entire account balance by the “end of the 10th year following the year of the owner’s death”, with exceptions for certain beneficiaries. Because the balance generally has to come out within that window, the timing of each withdrawal decides which tax year it lands in. See the 10-year rule and annual RMDs, lump sum versus spreading withdrawals and inherited IRA rules.
Withholding and other state taxes
Whether a state withholds from a withdrawal is a separate rule: see state withholding on retirement withdrawals. For New Jersey’s own death taxes, see New Jersey inheritance tax.
What the documents do not say
- The instructions do not mention inherited IRAs by name or say whether the exclusion applies to a beneficiary.
- No separate beneficiary guide or statute was read, so no statute section is cited.
- They do not describe a state deduction or credit for federal estate tax paid on the inherited amount.
Common mistakes
- Assuming New Jersey’s rule for your own retirement income also covers an account you inherited: read whether its documents address beneficiaries, and confirm the point with a New Jersey preparer.
Related: state tax on inherited IRA withdrawals, state by state, whether New Jersey taxes 401(k) and IRA withdrawals, New Jersey retirement taxes, New Jersey inheritance tax, inherited IRA rules, spouse versus non-spouse beneficiary rules, and state withholding on retirement withdrawals.
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Answer againSources
- 2025 NJ-1040 Instructions: https://www.nj.gov/treasury/taxation/pdf/current/1040i.pdf
- IRS Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs): https://www.irs.gov/pub/irs-pdf/p590b.pdf
Sources: the primary documents linked above, read on October 16, 2026. General information, not tax advice. Your own facts decide the outcome, and a tax professional or the state agency itself is the right place to confirm anything consequential.