1. What is the NJ Pension Exclusion?

The NJ Pension Exclusion allows qualified New Jersey residents to exclude a portion of their pension and retirement income from state income tax. The exclusion amount varies based on filing status.

2. How Does the Calculator Work?

The calculator uses the NJ pension exclusion formula:

Where:

• Single filers — $15,000 maximum exclusion
• Married filers — $20,000 maximum exclusion

Explanation: The exclusion amount is determined solely by your filing status, with married filers receiving a higher exclusion limit.

3. Importance of Pension Exclusion

Details: Properly claiming the pension exclusion can significantly reduce your New Jersey state tax liability, making retirement income more tax-efficient for eligible residents.

4. Using the Calculator

Tips: Simply select your filing status (single or married) and click calculate to determine your maximum pension exclusion amount.

5. Frequently Asked Questions (FAQ)

Q1: Who qualifies for the NJ pension exclusion?
A: New Jersey residents who are age 62 or older or permanently disabled, and have qualified pension or retirement income.

Q2: What types of income qualify for the exclusion?
A: Pensions, annuities, IRA distributions, and other qualified retirement plan distributions typically qualify.

Q3: Are there income limits for claiming the exclusion?
A: Yes, the exclusion phases out for taxpayers with New Jersey gross income over $100,000.

Q4: Can both spouses claim the exclusion?
A: Married couples filing jointly can claim up to $20,000 total, not per spouse.

Q5: How do I claim the pension exclusion on my tax return?
A: Use Form NJ-1040 and follow the instructions for the pension exclusion section.