For tax year 2025, New Jersey offers three retirement income exclusions. The Pension Exclusion and the Other Retirement Income Exclusion both require total income of $150,000 or less. If your total income exceeds $150,000, you are not eligible for either of these exclusions. The Pension Exclusion allows you to exclude all or part of pension, annuity, and IRA withdrawals, with the amount depending on your filing status and income bracket. The Other Retirement Income Exclusion has additional requirements: your income from wages, net profits from business, distributive share of partnership income, and net pro rata share of S corporation income must total $3,000 or less.
The Special Exclusion has no $150,000 income limit. It is for taxpayers age 62+ who cannot receive Social Security or Railroad Retirement benefits (and would have been eligible if they had fully participated). You can claim it even if you already used your maximum Pension Exclusion. Report it on the Other Retirement Income Exclusion line using Worksheet D (full-year residents). Very few taxpayers qualify because most are eligible for Social Security or Railroad Retirement. These rules are for tax year 2025; 2026 thresholds are unconfirmed.