Federal income tax
TPAF pensions are federally taxable except Accidental Disability Retirement and Accidental Death benefits. Contributions since January 1987 were tax-deferred; pre-1987 contributions and service purchases (unless rolled over) were after-tax and are recovered tax-free over your expected lifetime (or joint lifetime) under the IRS rules. Federal withholding defaults to Single with no adjustments until you change it in MBOS. Guidebook p. 33, Federal Income Tax After Retirement; Planning Guide p. 10
New Jersey income tax
If you live in New Jersey, the pension becomes subject to NJ income tax once you have recovered your own contributions in pension checks (contact the NJ Division of Taxation if that will take more than three years). Ordinary and Accidental Disability pensions are exempt from NJ tax until age 65. NJ withholding is voluntary. If you live outside NJ, the pension isn't subject to NJ income tax. Guidebook pp. 33-34, N.J. State Income Tax After Retirement; Planning Guide p. 10; N.J.S.A. 54A:6-10(a), (c)
The New Jersey retirement income exclusion
Age 62 or older (or disabled under Social Security): exclude up to $100,000 (married filing jointly), $75,000 (single) or $50,000 (married filing separately) of pension and retirement income if NJ gross income is $100,000 or less. From 2021, with gross income over $100,000 up to $125,000 the exclusion is 50% / 37.5% / 25% of that income; over $125,000 up to $150,000 it is 25% / 18.75% / 12.5%. No exclusion above $150,000. Planning Guide p. 10, New Jersey Retirement Income Exclusions; N.J.S.A. 54A:6-10(b)
How much you can exclude (age 62+)
| Filing status | Income $100,000 or less | Over $100,000 to $125,000 | Over $125,000 to $150,000 | Over $150,000 |
|---|---|---|---|---|
| Married filing jointly | Up to $100,000 | 50% of it | 25% of it | None |
| Single | Up to $75,000 | 37.5% of it | 18.75% of it | None |
| Married filing separately | Up to $50,000 | 25% of it | 12.5% of it | None |
"Income" is New Jersey gross income. The partial exclusions apply from tax year 2021. Planning Guide p. 10, New Jersey Retirement Income Exclusions; N.J.S.A. 54A:6-10(b)
The planning guide's note says the exclusion is limited to income of $100,000 or less, but its own table and the statute give partial exclusions up to $150,000. We follow the statute. Planning Guide p. 10, New Jersey Retirement Income Exclusions; N.J.S.A. 54A:6-10(b)
Refunds
Taxable portion has 20% federal withholding unless rolled over directly; possible 10% additional tax before age 59 1/2. Guidebook pp. 43-44, Withdrawal (See leaving teaching.)
Related: Social Security, and Chapter 78 health contributions, which are figured on your full monthly pension before deductions.
What the NJDPB says
- The TPAF pension is federally taxable, except Accidental Disability and Accidental Death benefits. If you paid in before 1987 or bought service with after-tax money, a small part of each check is tax-free.Guidebook p. 33
- In New Jersey, the pension isn't taxed until you have recovered your own contributions. Disability pensions are NJ-tax-free until 65. If you live outside NJ, NJ doesn't tax it.Guidebook pp. 33-34; Planning Guide p. 10
- At 62 or older, NJ lets you exclude up to $100,000 (married filing jointly), $75,000 (single) or $50,000 (married filing separately) of retirement income if your gross income is $100,000 or less, and a partial exclusion up to $150,000 of income.Planning Guide p. 10; N.J.S.A. 54A:6-10(b)
This is general information from the NJDPB's publications and the statute, not tax advice. Ask a tax professional or the NJ Division of Taxation about your own return.
Questions
Is my TPAF pension taxed?
Federally, yes, except Accidental Disability and Accidental Death benefits. In New Jersey, only once you've recovered your own contributions, and only if you live in New Jersey.
What is the New Jersey retirement income exclusion?
Age 62 or older (or disabled under Social Security): exclude up to $100,000 (married filing jointly), $75,000 (single) or $50,000 (married filing separately) of pension and retirement income if NJ gross income is $100,000 or less. From 2021, with gross income over $100,000 up to $125,000 the exclusion is 50% / 37.5% / 25% of that income; over $125,000 up to $150,000 it is 25% / 18.75% / 12.5%. No exclusion above $150,000.
Is my pension taxed if I move out of New Jersey?
No. If you live outside New Jersey, the pension isn't subject to New Jersey income tax.
Source: TPAF Member Guidebook, July 2026 (SP-0733-0726), pp. 33-34, 43-44. Also: Retirement Planning Member Guidebook (March 2025), p. 10. Statute: N.J.S.A. 54A:6-10. Last reviewed .