New Jersey Military Retirement Taxes 2026: Complete Tax Guide
100% exemption on ALL military retirement pay - near NYC metro
🎯 Quick Summary: New Jersey Military Retirement Taxes (2026)
- ✓ Military retirement pay: 100% exempt (no age/income limits)
- ✓ VA disability payments: Tax-free (federal and state)
- ⚠️ State income tax: 1.4% - 10.75% graduated (but exempt for military pensions)
- ✓ Property tax credit: Up to $6,000 for senior/disabled veterans
- ⚠️ Cost of living: 13% above national average (high housing costs)
- ✓ Overall ranking: Excellent for military retirees despite high cost of living
Why New Jersey Is Great for Military Retirement
New Jersey offers exceptional value for military retirees despite its reputation for high costs. With a 100% exemption on ALL military retirement pay (no age requirement, no income limit), you keep your entire military pension tax-free at the state level. This tax advantage can offset much of the higher cost of living.
Beyond tax benefits, New Jersey provides unmatched access to the NYC metropolitan area with its excellent job market, world-class cultural amenities, major military presence at Joint Base McGuire-Dix-Lakehurst (one of the largest joint bases in the U.S.), excellent public transportation, beautiful Jersey Shore beaches, diverse communities, strong veteran support network, and close proximity to both New York City and Philadelphia.
2026 New Jersey Military Retirement Tax Breakdown
State Income Tax on Military Retirement Pay
🎉 100% Exempt - No Restrictions!
New Jersey offers a complete 100% exemption on ALL military retirement pay. There are NO age requirements, NO income limits, and NO phase-outs. Whether you're 40 or 70, whether you have $30,000 or $300,000 in total income, your military pension is fully exempt from New Jersey's state income tax.
VA Disability Compensation
✓ Completely Tax-Free
VA disability payments are tax-exempt at both the federal and New Jersey state levels. Whether you receive 10%, 100%, or any rating in between, you keep every dollar.
New Jersey State Income Tax (2026)
| Income Type | Tax Rate | Notes |
|---|---|---|
| Military retirement pay | 0% (Exempt) | 100% exempt - no limits |
| VA disability | 0% (Exempt) | All ratings exempt |
| Other income (wages, business) | 1.4% - 10.75% | Graduated rates on taxable income |
| Social Security benefits | 0% (Exempt) | Not taxed by New Jersey |
Real Example: How Much You'll Save in New Jersey (2026)
Let's compare a military retiree in New Jersey vs. New York to see the tax savings:
Example Scenario: E-7 Retired After 20 Years
- • Military retirement pay: $2,800/month ($33,600/year)
- • VA disability (70%): $1,850/month ($22,200/year)
- • Civilian job: $65,000/year (NYC metro area)
- • Total annual income: $120,800
New Jersey (100% Exempt)
Military pension: $0 tax (100% exempt)
Civilian income: $65,000 × ~6.37% avg = $4,140
State tax: $4,140
New York (Partial Exemption)
Partial military pension taxed
All civilian income taxed at progressive rates
State tax: ~$6,500
Annual New Jersey Savings: $2,360
Over 20 years of retirement: $47,200 saved
Cost of Living in New Jersey for Military Retirees (2026)
New Jersey's cost of living is approximately 13% above the national average, primarily driven by housing and property taxes. However, proximity to NYC offers exceptional job opportunities:
| Category | vs National Average | Notes |
|---|---|---|
| Overall | 13% above | Offset by higher salaries |
| Housing | 30% above | Median home: $400K-$450K most areas |
| Healthcare | At average | Excellent VA facilities |
| Groceries | 8% above | Major chains widely available |
| Utilities | 10% above | Electric, gas, water avg $220/mo |
| Transportation | At average | Excellent public transit to NYC |
Military Presence in New Jersey
New Jersey has significant military presence providing excellent base access and a strong veteran community:
🎖️ Joint Base McGuire-Dix-Lakehurst
- McGuire Air Force Base - Air Mobility Command hub
- Fort Dix - Army training center
- Naval Air Engineering Station Lakehurst - Navy research & development
- One of the largest joint bases in the U.S.
- Provides full commissary, PX, and base amenities
✈️ Other Installations
- Picatinny Arsenal - Army research & development
- 177th Fighter Wing (Air National Guard, Atlantic City)
- Naval Weapons Station Earle
- Multiple National Guard armories statewide
Veteran Healthcare Facilities
New Jersey has 3 VA medical centers and numerous community-based outpatient clinics:
New Jersey Military Education Benefits (Tier 3: Good Programs)
New Jersey does not have a comprehensive state-level National Guard tuition waiver like some states, but offers the NJ Veterans Tuition Credit Program and excellent universities with Yellow Ribbon participation:
🎓 NJ Veterans Tuition Credit Program - $400-$500 Per Semester
The New Jersey Veterans Tuition Credit Program provides tuition assistance at participating New Jersey colleges and universities.
- Benefit: $400-$500 per semester (amount varies by institution)
- Eligibility: Honorably discharged NJ veterans who were NJ residents at time of entry into service
- Use at: Participating NJ colleges and universities (most public institutions participate)
- Can be combined with GI Bill and Federal TA
- No income limit
🪖 National Guard Federal Tuition Assistance
While New Jersey doesn't offer a state-level Guard tuition waiver, Guard members can use Federal Tuition Assistance.
- Benefit: Up to $4,500 per fiscal year (covers tuition up to $250 per credit hour)
- Eligibility: Active NJ National Guard members in good standing
- Covers: Undergraduate and graduate courses at accredited institutions
- Can be combined with NJ Veterans Tuition Credit
- Apply through your unit's education services officer
🏠 NJ Veterans Property Tax Benefits - Up to $6,000 Credit
New Jersey offers significant property tax benefits for qualifying veterans and senior citizens.
- Senior/Disabled Veterans Property Tax Credit: Up to $6,000 annually for veterans aged 65+ or permanently/totally disabled
- Veterans Property Tax Deduction: $250 annual deduction for all honorably discharged wartime veterans
- 100% Disabled Veterans: May qualify for additional local exemptions (varies by municipality)
- Apply through your local tax assessor's office
🟡 Yellow Ribbon Program Schools in New Jersey
New Jersey is home to excellent universities participating in the Yellow Ribbon Program, helping cover tuition beyond the GI Bill's annual cap.
Major Universities
- Princeton University (Ivy League)
- Rutgers University
- Stevens Institute of Technology
- Seton Hall University
- Fairleigh Dickinson University
Additional Schools
- Montclair State University
- Rider University
- Rowan University
- New Jersey Institute of Technology
- The College of New Jersey
Note: Yellow Ribbon amounts and eligibility vary by school and program. Check with each institution's veterans office.
📚 New Jersey Community College System (19 Colleges)
New Jersey's 19 community colleges provide affordable education with veteran support services.
- Atlantic Cape CC
- Bergen CC
- Brookdale CC
- Burlington County College
- Camden County College
- County College of Morris
- Cumberland County College
- Essex County College
- Gloucester County College
- Hudson County CC
- Mercer County CC
- Middlesex County College
- Ocean County College
- Passaic County CC
- Raritan Valley CC
- Rowan College at Burlington County
- Salem CC
- Sussex County CC
- Union County College
Average tuition: ~$4,500/year for in-county students. Fully covered by GI Bill with housing allowance.
🏠 In-State Tuition for Veterans
Veterans using GI Bill benefits qualify for in-state tuition at New Jersey public colleges and universities under federal law.
- Applies to: All New Jersey public institutions (Rutgers, state colleges, community colleges)
- Eligibility: Veterans using Post-9/11 GI Bill or their dependents using transferred benefits
- Also covers: Spouses and dependents using transferred GI Bill benefits
- No waiting period required
📋 How to Apply for NJ Military Education Benefits
NJ Veterans Tuition Credit Program:
- Contact the veterans affairs office at your college/university
- Provide DD-214 showing honorable discharge
- Complete institution's application form
- Apply each semester (credit is not automatic)
Property Tax Benefits:
- Contact your local municipal tax assessor
- Provide DD-214 and proof of age/disability if applicable
- Apply by October 1 for the following tax year
- NJ Division of Veterans Services: 1-800-624-0508
GI Bill & Yellow Ribbon:
- Apply for GI Bill through VA.gov
- Contact school's veterans office for Yellow Ribbon enrollment
Best Cities in New Jersey for Military Retirees (2026)
| City | Nearby Base/Access | Median Home Price | Why It's Great |
|---|---|---|---|
| Tom's River | 30 min to JB MDL | $375,000 | Jersey Shore access, family-friendly, good schools |
| Cherry Hill | Near Philly | $420,000 | Close to Philadelphia, excellent shopping, suburban |
| Parsippany | Near NYC | $485,000 | NYC metro access, excellent job market, corporate hubs |
| Jackson/Browns Mills | Near JB MDL | $390,000 | Close to Joint Base, large veteran community, affordable |
Pros and Cons of Retiring in New Jersey
✅ Pros
- • 100% exemption on military retirement (no limits)
- • Social Security not taxed
- • Property tax credit up to $6,000 for senior/disabled vets
- • Near NYC metro - exceptional job market
- • Joint Base McGuire-Dix-Lakehurst - major installation
- • Excellent public transportation to NYC/Philly
- • Jersey Shore beaches
- • Strong VA healthcare (3 medical centers)
- • Diverse communities and cultural amenities
- • No sales tax on clothing
- • Four seasons with milder winters than northern states
⚠️ Cons
- • Cost of living 13% above national average
- • Housing costs 30% above average ($400K-$450K)
- • High property taxes (highest in nation)
- • State income tax on civilian income (1.4% - 10.75%)
- • Traffic congestion near NYC metro
- • No state-level Guard tuition waiver (only $400-$500/semester credit)
- • Higher insurance costs
- • Crowded in some areas
Frequently Asked Questions
Does New Jersey tax military retirement pay?
No. New Jersey offers a 100% exemption on ALL military retirement pay with no age requirement and no income limit. This applies to all military pensions whether you retired from active duty, reserves, or National Guard. You'll only pay federal income tax, with zero New Jersey state tax on your military retirement.
What is New Jersey's state income tax rate in 2026?
New Jersey has a graduated state income tax with rates ranging from 1.4% to 10.75% (2026). However, military retirement pay is 100% exempt from this tax. You'll only pay these rates on other taxable income like civilian wages or business income. Social Security benefits are also exempt from New Jersey state tax.
What property tax benefits do veterans get in New Jersey?
New Jersey offers a property tax credit of up to $6,000 annually for senior citizens and disabled veterans aged 65 or older, or permanently and totally disabled veterans. The Veterans Property Tax Deduction provides a $250 annual deduction for all honorably discharged veterans who served during wartime. 100% disabled veterans may qualify for additional local exemptions. Contact your local tax assessor for details.
What are the major military bases in New Jersey?
New Jersey's major military installation is Joint Base McGuire-Dix-Lakehurst (JB MDL), which combines McGuire Air Force Base, Fort Dix (Army), and Naval Air Engineering Station Lakehurst into one of the largest joint bases in the United States. The state also has Picatinny Arsenal (Army research and development) and the 177th Fighter Wing (Air National Guard in Atlantic City).
Does New Jersey offer education benefits for National Guard?
New Jersey does not have a comprehensive state-level National Guard tuition waiver program like some states. However, the state offers the NJ Veterans Tuition Credit Program, which provides $400-$500 per semester for eligible veterans at participating New Jersey colleges and universities. National Guard members can also use Federal Tuition Assistance (up to $4,500 per year) and combine it with the Veterans Tuition Credit and GI Bill benefits.
What are the best cities in New Jersey for military retirees?
Top cities for military retirees in New Jersey include Tom's River (near the Jersey Shore with homes around $375K), Cherry Hill (close to Philadelphia with median price of $420K), Parsippany (near NYC with excellent job market and homes at $485K), and areas near Joint Base McGuire-Dix-Lakehurst such as Jackson and Browns Mills (strong veteran community with homes around $390K).
Is the cost of living worth it in New Jersey for military retirees?
While New Jersey's cost of living is 13% above the national average, the 100% military pension exemption plus access to the NYC/Philadelphia job markets can offset these costs. Veterans who work civilian jobs in the NYC metro area often earn 20-30% higher salaries than the national average. The property tax credit (up to $6,000) also helps significantly. If you value proximity to major cities and career opportunities, New Jersey can be worth the higher costs.
Calculate Your New Jersey Retirement Income
Use our free calculator to see exactly how much you'll keep after taxes when retiring in New Jersey. Factor in your military pension, VA disability, and any civilian income to plan your retirement with confidence.
Ready to Calculate Your New Jersey Retirement Income?
See exactly what civilian salary you need based on your retirement pay, VA disability, and New Jersey's 100% military pension exemption
Use the Free Calculator →🏙️ Bottom Line for New Jersey Military Retirement
New Jersey offers excellent tax advantages for military retirees with 100% exemption on ALL military retirement pay (no age or income limits). While the cost of living is 13% above the national average, the proximity to the NYC metro area provides exceptional job opportunities with salaries 20-30% higher than the national average. Combined with Joint Base McGuire-Dix-Lakehurst, property tax credits up to $6,000 for senior/disabled veterans, excellent public transportation, and strong VA healthcare, New Jersey is an outstanding retirement destination for servicemembers who value career opportunities and metropolitan access. Use our calculator above to see your exact financial picture in the Garden State.
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