Depending on your income level, it could be free of state tax.
Q. As a federal employee living in New Jersey, how will my pension be taxed?A. There’s a lot to think about when it comes to taxes if you’re deciding which state to live in.Let’s start with the pension in general.regardless of where the job was when the pension was funded, said Michael Karu, a certified public accountant with Levine, Jacobs & Co. in Livingston.
He offered this example. Let’s say a person lived and worked for their entire career in New York and then retired to New Jersey. Once in New Jersey, they start receiving their pension. It will only beand not be taxable to New York, even though it was generated based on New York income. “For federal employees, your FERS and/or CSRS pensions are taxable, but not on your contributions, so you have to calculate the taxable and non-taxable portions,” he said. “New Jersey does not tax U.S. military pensions or survivorship benefits.”
But that exemption does not apply to civil service pensions or annuities, even if it’s based on military service, he said. But New Jersey also has a pension exclusion for those who are 62 or older or permanently disabled or blind, Karu said.from New Jersey tax, while a married couple can exclude $100,000. The exclusion is phased out for people who earn between $100,001 and $150,000, and there is no exclusion for those making $150,001 or more.
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