This page provides basic information. Filing requirement details and other military and veteran information can be found in GIT-7 (Military Personnel and Families) .
Military pay is taxable for New Jersey residents, including combat zone pay received in 2020 and prior.
For Tax Year 2021 and forward, combat pay is not taxable in New Jersey (P.L. 2020, c. 93). The law excludes military pay for service in a combat zone, or for hospitalization as the result of injury while serving in a combat zone, from income under the New Jersey Gross Income Tax Act. If your combat pay is exempt from federal income tax, it is exempt for New Jersey and should not be reported on a New Jersey Income Tax return (Form NJ-1040, Form NJ-1040NR).
Mustering-out payments, subsistence and housing allowances, and U.S. military pension and survivor's benefit payments are not taxable.
New Jersey follows the federal Servicemembers Civil Relief Act, 50 U.S.C. § 3901 et seq. A service member who was a resident of a particular state when entering the service remains a resident of that state, regardless of where the individual is stationed (50 U.S.C. § 4001). That means an individual remains a resident of New Jersey unless a change of domicile in another state is established. Therefore, when the military posts a service member for duty, the location of the military post does not automatically change his or her residency for tax purposes.
New Jersey residents must report all taxable income, regardless of where it is earned, unless it is specifically exempt under New Jersey law. You must report your military pay, including combat pay (2020 and prior), and cost-of-living allowance, as wages on Form NJ-1040. Refer to Military Personnel and Families for information on change of residency.
Nonresidents are taxed only on income they receive from New Jersey sources other than military compensation, such as a second part-time job. New Jersey source income does not include a civilian spouse’s wages earned in New Jersey if they qualify as a nonresident under the federal Military Spouses Residency Relief Act.
Native American service members must file federal Form DD-2058-2 with the payroll or finance officer to claim exemption from New Jersey Income Tax withholding on service pay.