New Jersey Military Retired Pay and Survivor Benefit Exclusion
Military retired pay and military survivor benefit payments are fully excluded from New Jersey income tax at any age, with no dollar limit. Student loans discharged because a veteran is totally and permanently disabled are excluded too.
Also called: N.J.S.A. 54A:6-26, N.J.S.A. 54A:6-25.2, military pension, Survivor Benefit Plan, SBP, RCSBP, retired pay, Total and Permanent Disability discharge.
N.J.S.A. 54A:6-26: "Gross income shall not include military pension payments or military survivor's benefit payments paid to individuals by the United States with respect to service in the Armed Forces of the United States." It has been a full exclusion since P.L.2001, c.84, with no age, amount or length of service condition, so it covers Guard and reserve retired pay and Survivor Benefit Plan annuities alike.
Two things it does not reach. Pay received while serving is taxable to a New Jersey resident, apart from combat zone pay excluded federally. And a military retiree who takes a civilian federal or state pension pays tax on that under the ordinary pension rules.
VA disability compensation, dependency and indemnity compensation and VA pension are not in federal gross income and are not taxed by New Jersey.
Student loan discharges. N.J.S.A. 54A:6-25.2, added by P.L.2022, c.125, excludes from gross income any student loan discharged through the federal Total and Permanent Disability discharge process for a veteran whom VA has found to have a service-connected disability "that is 100 percent disabling or to be totally disabled based on an individual unemployability rating".
Thresholds
Thresholds for New Jersey Military Retired Pay and Survivor Benefit Exclusion
Gate
Rule
Student loan discharge exclusion at 100 percent or through unemployability
N.J.S.A. 54A:6-25.2. The pension exclusion itself has no rating condition.
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Disclaimer
VetTOC is not affiliated with the U.S. Department of Veterans Affairs or the Department of Defense. Information is for reference only and is not an eligibility determination. Verify with VA, the relevant state or territory, or an accredited VSO.