As you go through your NJ return, on the screen Less Common Filing Situations, check the box for Military Veterans.
Here’s some information from the State of NJ about this exemption.
I had the same problem, but it was answered. Where you enter your exemptions you will see a checkoff for veterans (12c). On line 29 is where you enter the amount you calculated on the worksheet on page 28 of the NJ1040 instruction booklet. It's a nice deduction - thanks NJ.
<a rel="nofollow" target="_blank" href="http://www.state.nj.us/treasury/taxation/military/vetexemption.shtml">http://www.state.nj.us/treasury/taxation/military/vetexemption.shtml</a>
Aside from checking the right box in TurboTax to claim this exemption, it looks like you need to submit your DD-214 or other documentation to t he state the first time you claim it. I file electronically with TurboTax. How do I submit this paperwork to the state to claim this?