According to the New Jersey Department of the Treasury instruction booklet, U.S. military pension and survivor’s benefit payments are exempt from New Jersey Income Tax.
In order to exclude this income from your state return, please go to:
- State Section
- Edit New Jersey Return
- Income Subject to Tax
- Enter Military Pension, Survivor Benefit Payments, other Qualifying Income Exempt from NJ tax, or Nonresidency Pension Income, enter the the excluded amount as a negative number.