If your pension was contributory, generally, your personal contributions to your pension or annuity are taxed while you are still working. Because those contributions were taxed once, New Jersey will not tax them again. Therefore, you may exclude from income the part of a pension or annuity payment that represents contributions that already have been taxed.
However, any amount you receive in excess of your previously taxed contributions must be reported as taxable income. You must determine the taxable and excludable portions of payments you receive from a pension or annuity to which you have made contributions. You will use either the 3-year rule or General Rule as described in this link.
If that is the case this link has worksheets to determine whether the 3-year rule or General rule gives you the most tax benefit.
If your pension is non-contributory you would select "none".
Noncontributory plans do not require an employee to make contributions toward their retirement. Payments you receive from such a plan are fully taxable because you never paid tax on any of the funds in the plan. You will report on your return the total amount of pension or annuity income shown on your Form 1099-R.
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