Gov. Phil Murphy signed a bill into law Tuesday (June 6) that expands tax exemptions for those receiving between $100,000 and $150,000 in pension and retirement income.
New Jersey typically has one of the nation’s highest costs of living. In efforts to keep retirees from leaving, the state raised the amount of retirement income that could be excluded from state taxes in 2017. But the change only impacted income less than $100,000.
Under the new law, taxpayers earning between $100,000 and $150,000 will receive a partial exclusion, beginning with the 2021 tax year. The law will benefit nearly 70,000 people, according to state officials.
The bill unanimously passed the State Assembly and Senate. The law will reduce tax revenue by $51-73 million per year, according to the Office of Legislative Services.
Taxpayers who make between $100,000 and $150,000 in retirement or pension income became eligible for the following:
- an exclusion on 50 percent if married and filing jointly
- a reduction of 25 percent if married and filing separately
- a deduction of 37.5 percent if filing as single
For those making between $125,000 and $150,000 in pension and retirement income, they can get 25 percent less if filing jointly, 12.5 off if married and filing separately and 18.75 percent less if filing as single.
The expansion allows, for instance, a married couple making $120,000 in retirement income to receive partial exclusion. In previous filing years, they would not have received any benefit from the retiree exclusions.
“Raising the retirement income exclusion limit allows us to provide even more financial stability to our retirees living off fixed income,” said Assemblyman John Burzichelli. “Greater alignment of tax relief with the current costs of living, as provided under the expansion, ensures New Jersey continues to be a place where our seniors thrive.”
New Jersey has struggled with people — especially retirees — moving out. In 2018, twice as many people moved away from than to the Garden State, according to a study from United Van Lines.
The most popular reason for moving away from New Jersey was retirement, which 32.25 percent of respondents claimed. More residents moved out of New Jersey than any other state, according to the survey.
Cosmo Insurance Agency is a full-service independent insurance agency based in Hackensack (Bergen County) and Lakewood (Ocean County), New Jersey that offers an all-encompassing range of insurance options for both individuals and businesses. Cosmo keeps its promise to assure an efficient and creative approach to the services we offer. Each of our clients experience a personalized and long-term relationship with us. Our New Jersey based team of health brokers guides our clients in helping them choose the most cost-effective options. By incorporating our knowledge of the insurance guidelines for healthcare, employee benefits, life insurance, self-insurance, dental, disability, and long term care insurance, we keep our clients up-to-date with affordable plans that cover all their specific insurance needs.
