Does New Jersey Tax Retirement Income?

No. New Jersey does not tax Social Security benefits.

Social Security benefits are not taxable in New Jersey and do not count toward the income limits for the pension exclusion.

The New Jersey answer is separate from the federal one. Depending on combined income, up to 85% of Social Security benefits can be taxable on the federal return regardless of what New Jersey does, so the state rule changes the state line only. Our guide to states that do not tax Social Security shows where New Jersey sits among the states that still tax benefits.

Partly. New Jersey taxes some pension income, subject to an exclusion or age rule.

Pension and annuity income is generally taxable, but filers 62 and older (or disabled per Social Security rules) with total income of $150,000 or less can exclude some or all of it under the pension exclusion. Military pensions and survivor benefit payments are fully exempt regardless of income.

At total income of $100,000 or less, filers 62 and older can exclude up to $100,000 (joint), $75,000 (single), or $50,000 (married filing separately). From $100,001 to $125,000 the exclusion drops to a percentage of pension income (50% joint, 37.5% single), from $125,001 to $150,000 it drops again (25% joint, 18.75% single), and above $150,000 it is zero. One extra dollar of income past $150,000 can eliminate the entire exclusion.

Public and private pensions, annuities, and retirement-plan distributions do not always get the same treatment. The pension comparison lists which states exempt pensions broadly, partly, or only for certain plans.

Partly. New Jersey taxes some traditional 401(k) and IRA withdrawals, subject to an exclusion or age rule.

Traditional 401(k) and IRA withdrawals are generally taxable but qualify for the same pension exclusion. IRA withdrawals often include a nontaxable basis portion in New Jersey because the state never allowed a deduction for traditional IRA contributions.

Two timing points matter in New Jersey. A Roth conversion is taxable in the year it is done, and New Jersey starts from federal adjusted gross income, so a large conversion can land in a year when the state exclusion does not cover it. Qualified Roth withdrawals later are generally not taxable at either level. Required minimum distributions follow the same New Jersey rules as any other traditional-account withdrawal.

Every state page on this site runs the same retiree profile so the states can be compared: $30,000 of Social Security, $40,000 withdrawn from a traditional 401(k), and a $20,000 private pension, $90,000 in total.

A 68-year-old single filer with $30,000 of Social Security, $40,000 from a 401(k), and a $20,000 private pension has $60,000 of New Jersey income, since Social Security does not count. That is under the $100,000 tier and below the $75,000 single-filer exclusion cap, so generally the entire $60,000 can be excluded and the New Jersey income tax bill is about zero.

Social Security is left out of New Jersey income entirely, so the filer's total income for the exclusion test is $60,000. That is under the $100,000 tier, the filer is over 62, and $60,000 is below the $75,000 single cap, so the whole $60,000 is excluded and the New Jersey tax is roughly $0. Now add a $150,000 lump-sum IRA withdrawal in the same year: total income becomes $210,000, which is past the $150,000 cutoff, the exclusion disappears entirely, and roughly $209,000 after the $1,000 personal exemption is taxed under the single schedule at 6.37% less the $2,126 bracket subtraction, roughly $11,200 of New Jersey tax. Take $40,000 of extra IRA money instead, holding total income at $100,000: the $75,000 exclusion survives, only $25,000 is taxable, and the bill is roughly $370. The same dollars withdrawn across several years can avoid most of that five-figure swing.

The same $90,000 profile looks different a state line away. The rows below come from the reviewed 51-state table; each state name links to its own guide.

• Pennsylvania: treats Social Security as exempt, pensions as exempt, and 401(k) and IRA withdrawals as exempt, with a top rate of 3.07% and eligible retirement distributions are exempt.
• Delaware: treats Social Security as exempt, pensions as partially taxed, and 401(k) and IRA withdrawals as partially taxed, with a top rate of 6.60% and up to $12,500 pension exclusion at age 60+.
• Florida: has no individual income tax at all.

New Jersey's 10.75% top rate scares retirees who often should not be scared. A couple living on Social Security plus under $100,000 of retirement income can owe little or no New Jersey income tax. The real traps are the $150,000 cliff and the inheritance tax on transfers to siblings, nieces, and nephews.

Military retirement: Military pensions and military survivor benefit payments are fully exempt from New Jersey income tax at any age and any income level. See the military retirement tax map for every state's treatment.

Estate and inheritance tax: New Jersey repealed its estate tax for deaths on or after January 1, 2018, but it still has an inheritance tax of up to 16% on transfers to beneficiaries other than spouses, children, grandchildren, and parents.

Selling a home or investments in New Jersey: retirement-income rules do not cover capital gains. See New Jersey capital gains tax before selling appreciated property or a brokerage position in the year you move or retire.

• Confirm the exclusion you are claiming. At total income of $100,000 or less, filers 62 and older can exclude up to $100,000 (joint), $75,000 (single), or $50,000 (married filing separately). From $100,001 to $125,000 the exclusion drops to a percentage of pension income (50% joint, 37.5% single), from $125,001 to $150,000 it drops again (25% joint, 18.75% single), and above $150,000 it is zero. One extra dollar of income past $150,000 can eliminate the entire exclusion.
• Part-year residents. If you moved into or out of New Jersey during the year, retirement income is generally allocated to the period of residency, and the former state may still tax distributions received before the move. Document the move date, the new domicile, and where each distribution was received.
• Withholding and estimates. Pension and IRA custodians often withhold federal tax but not New Jersey tax. If New Jersey taxes any part of your retirement income, check whether quarterly estimated payments are needed to avoid an underpayment penalty.
• Federal side. The federal return has its own rules: up to 85% of Social Security can be taxable, the temporary $6,000 federal senior deduction is available for 2025 through 2028 subject to income limits, and Roth conversions are taxed in the conversion year. State exemptions do not change any of that.
• Large one-time distributions. Manage income to the tiers, not just the cliff. Crossing $100,000 cuts the exclusion percentage sharply, and crossing $150,000 kills it entirely, so a Roth conversion or large IRA withdrawal in the wrong year can convert a zero-tax situation into a five-figure state bill.

Comparing states before a move? Use the retirement taxes by state table and the moving states tax guide, and read retirement tax planning for how distributions, conversions, and a move are sequenced together.