Why is Pension Exclusion for New Jersey incorrect?

[Broncos07940]

2025 desktop New Jersey is applying exclusion on "pension (ira) income" using outdated tiers although the law changed in 2018.   Now, the law says there is only a single limit at $150,000.   Will Turbotax ever fix?

[RogerD1]

This comes from the State of New Jersey Division of Taxation:  "You can exclude all or part of the pension income reported if you (and your spouse) were 62 or older by 12/31 (for calendar year filers); and your total income was $150,000 or less'"

A full exclusion of $100,000 is available if you are Married Filing Jointly and your total income is $100,000 or less

For Married Filing Separately, a full exclusion is available if your total income is $50,000 or less

For all other filing statuses, the full exclusion of the pension income is available if you total income is $75,000 or less.

Partial exclusions of income apply to total income levels above the previous levels given, up to $150,000.

Here's a link to the details of the NJ Pension Exclusion

[Broncos07940]

I'm finding the NJ website (which you cite) and the NJ 1040 are not consistent:  my understanding is the 1040 applies a single threshold (cliff) for pension exclusion at income of $150,000, while the web site says there are tiered thresholds......   

[BillM223]

"my understanding is the 1040 applies a single threshold (cliff) for pension exclusion at income of $150,000"

Could you share with us where you see this? I have to agree with Rogers that the various places on the NJ website, that there is a three-tier structure for pension exemptions. Look at the line 20 instructions in the NJ-10140 Instructions (the official instructions, although not the statute).

Please let us know.

[Broncos07940]

Thank you for providing the NJ instructions - - and you are correct, it is clearly shown as tiered;   My "source" was Microsoft CoPilot.   Because of TurboTax limitation in providing future year tax projections, I tried to use CoPilot, and have been going around and around with it on a number of issues, both to try to learn how to use it, and to determine whether it's worth using;   I have determined, in this case, CoPilot is harmful;    It flip flopped on this pension exclusion 4 different times....(and literally made me think I was interacting with a robot from 1973 movie "Westworld")  

[Broncos07940]

I'm back... and still wrestling w/ CoPilot - - which is saying the defining authority for whether or not Traditional IRA income is applicable for the Pension Exclusion is the worksheet for Line 28a, which is part of GIT 1&2.   

Honestly, I've spent a few minutes trying to figure that table out, to no avail - - it's NOT at all clear...

[Broncos07940]

Ok - I uploaded 2026 Git1&2.pdf to CoPilot and it immediately replied:   Yes, IRA withdrawals are included and applicable to the Pension Exclusion - - ....so, the tiered exclusions apply - - Thank Goodness!    At least NJ is now clear:     If we could only get Congress to act and extend TCJA, life will be good