Retiring in New Jersey: how your income is taxed
New Jersey is very tax-friendly for retirees. On a typical retirement income it ranks tied for #1 of 51 with 18 other states for the lowest state income tax.
The rules in New Jersey
- Social Security: Social Security is fully exempt and does not count toward the income limits for the pension exclusion.
- Pensions: At 62 and older (or if disabled), with total income of $100,000 or less, you can exclude up to $100,000 (joint), $75,000 (single or head of household) or $50,000 (married filing separately) of pension, annuity and IRA income. With income of $100,001 to $125,000 you can exclude 50%, 37.5% or 25% of it; at $125,001 to $150,000, 25%, 18.75% or 12.5%; above $150,000, nothing. The joint limit is per couple, not per person. Public and private pensions follow the same rules, and U.S. military pensions are excluded regardless of age or income.
- 401(k), 403(b) and IRA withdrawals: Taxable pension, annuity and IRA withdrawals share one exclusion: up to $100,000 (joint) or $75,000 (single) if total income is $100,000 or less, and a percentage of it up to $150,000 of income. A separate exclusion for other retirement income applies if earned income is $3,000 or less.
- At 65 and older: Each filer 65 or older gets an extra $1,000 exemption.
Calculate your New Jersey retirement taxes
State income tax in New Jersey: $0 a year
In New Jersey, the 401(k)/IRA amount counts as IRA withdrawals, which don't qualify for the pension exclusion. Enter withdrawals from employer plans such as a 401(k) or 403(b) as pension.
In New Jersey you'd pay about $0 in state income tax and $4,336 in federal income tax on $70,000 of retirement income, keeping $65,664 (6.2% total).
New Jersey ranks tied for #1 of 51 with 18 other states for the lowest state tax on this income. 19 states charge no state income tax on this income.
What retirees pay in New Jersey
| Retirement income | State tax (single) | State tax (married) | Federal tax (single) |
|---|---|---|---|
| $24,000 Social Security, $12,000 401(k)/IRA | $0 | $0 | $0 |
| $30,000 Social Security, $20,000 pension, $20,000 401(k)/IRA | $0 | $0 | $4,336 |
| $40,000 Social Security, $40,000 pension, $50,000 401(k)/IRA, $10,000 other income | $333 | $84 | $19,812 |
Age 67 or older, 2026 rules including the federal senior deduction. For married couples, income is the household total and both spouses are 67 or older. State estimates apply New Jersey's main exclusions and may differ for income-tested credits.
Moving to New Jersey in retirement?
Compare the tax on your Social Security, pension and 401(k)/IRA income, and typical living costs, with the state you'd leave. These are the states most households moving to New Jersey come from (IRS migration data, 2022–2023).
- New York to New Jersey
- Pennsylvania to New Jersey
- Florida to New Jersey
- California to New Jersey
- Texas to New Jersey
- Massachusetts to New Jersey
Frequently asked questions
Does New Jersey tax Social Security?
Not taxed. Social Security is fully exempt and does not count toward the income limits for the pension exclusion.
Does New Jersey tax pensions?
Partly taxed. At 62 and older (or if disabled), with total income of $100,000 or less, you can exclude up to $100,000 (joint), $75,000 (single or head of household) or $50,000 (married filing separately) of pension, annuity and IRA income. With income of $100,001 to $125,000 you can exclude 50%, 37.5% or 25% of it; at $125,001 to $150,000, 25%, 18.75% or 12.5%; above $150,000, nothing. The joint limit is per couple, not per person. Public and private pensions follow the same rules, and U.S. military pensions are excluded regardless of age or income.
Does New Jersey tax 401(k) and IRA withdrawals?
Partly taxed. Taxable pension, annuity and IRA withdrawals share one exclusion: up to $100,000 (joint) or $75,000 (single) if total income is $100,000 or less, and a percentage of it up to $150,000 of income. A separate exclusion for other retirement income applies if earned income is $3,000 or less.
Is New Jersey a good state to retire for taxes?
For a single retiree with $30,000 Social Security, $20,000 pension, $20,000 401(k)/IRA, New Jersey charges about $0 in state income tax, ranking tied for #1 of 51 with 18 other states (lowest tax first).
Related
Sources: nj.gov. Rules reviewed .