topic Why is Pension Exclusion for New Jersey incorrect? in Retirement tax questions

Why is Pension Exclusion for New Jersey incorrect?

Broncos07940 — Sun, 15 Feb 2026 14:23:27 GMT

2025 desktop New Jersey is applying exclusion on "pension (ira) income" using outdated tiers although the law changed in 2018.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?

Re: Why is Pension Exclusion for New Jersey incorrect?

RogerD1 — Thu, 19 Feb 2026 22:35:59 GMT

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

Re: Why is Pension Exclusion for New Jersey incorrect?

Broncos07940 — Sat, 21 Feb 2026 15:47:06 GMT

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......

Re: Why is Pension Exclusion for New Jersey incorrect?

BillM223 — Mon, 23 Feb 2026 21:07:32 GMT

"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.

Re: Why is Pension Exclusion for New Jersey incorrect?

Broncos07940 — Mon, 23 Feb 2026 21:29:18 GMT

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")

Re: Why is Pension Exclusion for New Jersey incorrect?

Broncos07940 — Mon, 09 Mar 2026 15:03:44 GMT

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...

Re: Why is Pension Exclusion for New Jersey incorrect?

Broncos07940 — Mon, 09 Mar 2026 15:11:42 GMT

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