Qualified disaster relief payments excluded under IRC §139 are not taxable income for New Jersey purposes. This includes amounts to cover necessary personal, family, living, or funeral expenses that were not covered by insurance. It also includes expenses to repair or rehabilitate personal residences or repair or replace the contents to the extent that they were not covered by insurance. These payments should not be included as income when you file your tax return.
However, disaster-related payments for lost wages or business income are subject to tax and must be reported on your New Jersey tax return.