This calculator shows whether your household keeps the New Jersey retirement income exclusion, how much of it, and how close you are to losing it.
Are you over the New Jersey pension exclusion cliff?
New Jersey lets people 62 and older exclude retirement income from tax, but the exclusion falls away in steps and disappears entirely one dollar over $150,000. Nothing is prorated at the top.
Exclusion rules and the $150,000 limit from the Division of Taxation page on retirement income exclusions and the instructions to Form NJ-1040, line 28a.
How it works
Why this is the New Jersey question
New Jersey does not tax Social Security, and for many retired households the exclusion means a large part of the remaining pension and retirement income is not taxed either. Losing it is therefore not a marginal event. At $150,001 of total income the exclusion is gone in full, which means a dollar of extra income can cost thousands.
| Total income | Married filing jointly | Single or head of household | Married filing separately |
|---|---|---|---|
| $100,000 or less | $100,000 | $75,000 | $50,000 |
| $100,001 to $125,000 | 50% of retirement income | 37.5% | 25% |
| $125,001 to $150,000 | 25% of retirement income | 18.75% | 12.5% |
| Over $150,000 | Nothing | Nothing | Nothing |
The bands are a percentage of your income, not of the cap
Up to $100,000 of total income the exclusion is a flat cap set by filing status. From $100,001 to $125,000 it becomes 50%, 37.5% or 25% of your own pension and retirement income depending on how you file, and from $125,001 to $150,000 it halves again. Above $150,000 there is none.
The distinction matters: it is a percentage of what you actually received, not a percentage of the dollar cap. Getting that wrong overstates the exclusion for most households, and it is the error this calculator was built to avoid.
What pushes a household over
Usually something one-off and controllable: a Roth conversion, a property sale, a lump sum, or taking two required distributions in the same year. December is when this becomes urgent and January is when it becomes academic for another twelve months.
Questions
Common questions
Does Social Security count in total income?
No. New Jersey does not tax Social Security benefits and they do not count toward the total income test.
Check this against your own numbers.
The exclusion is lost in full rather than tapered once total income passes the line, and the income that crosses it is usually the income you chose to take. We can cover it in a short conversation, at no charge and with no obligation.
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