Q. I retired from my job as a laborer for the Department of Public Works in my town in September 2021. I was at full retirement age at 66. I receive a monthly state pension of $1,180. I’m aware of a three-year pension exclusion.
“When you begin to receive your pension, it is not taxable to New Jersey until you have recovered your total contribution, which is deemed return of your investment, which normally takes approximately three years,” Gallo said. “Since you did not pay federal taxes on your contribution when they were deducted from your paycheck, you are responsible to pay federal taxes on your pension income in full.
Since you retired in September of 2021, Gallo said, you would most likely not have to pay New Jersey income taxes on your state pension until late 2024 or early 2025.
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