New Jersey is often labeled a high-tax state. The top marginal income tax rate approaches 11%, and property taxes are frequently cited as among the highest in the country.

But for retirees, the reality can look very different, according to Jeffrey Christakos, CPA/PFS, a partner with Christakos Financial.

In a recent interview, Christakos explained that New Jersey eliminated its estate tax, excludes Social Security benefits from taxation, and offers significant retirement income exclusions and property tax relief.

New Jersey offers some little-known retirement perks.

Below is a transcript of that interview, edited for clarity and brevity.

Retirement taxes in New Jersey: What retirees need to know

Robert Powell: New Jersey has one of the highest tax rates of all states, but retirees enjoy several tax breaks and exceptions. Here to talk with me about that is Jeffrey Christakos. He is a wealth adviser with Christakos Financial in New Jersey and a member of the American Institute of CPAs’ PFP Champions Task Force. Jeff, welcome.

Jeffrey Christakos: Hi. How are you? Good to be here.

Robert Powell: It’s great to have you. We’re continuing our series on the tax consequences for retirees in certain states. You have the advantage of talking about New Jersey. Where should we begin?

Income taxes and retirement income exclusions

Jeffrey Christakos: New Jersey is a great place to live. I’ve lived here almost all my life. The tax code is interesting and, as always, it depends. Everything depends.

The top marginal income tax rate is close to 11%, and if you make more than $1 million, you’ll pay that higher rate. But specifically for retirees, Social Security benefits are excluded from taxation. There are also exclusions on retirement income, which makes the state more affordable for those living on a fixed income plus Social Security.

Robert Powell: When you mention retirement accounts, you’re referring to IRAs, 401(k)s, and defined benefit pension plans?

Jeffrey Christakos: Yes. Required minimum distributions, or RMDs, and other retirement distributions are generally subject to taxation, but they may also qualify for the retirement income exclusion.

The key threshold to remember is $150,000. If total income exceeds $150,000, the retirement income exclusion essentially phases out. That’s where tax planning becomes important.

Social Security is not taxable in New Jersey. But when we look at income, we include all sources — pension distributions, capital gains, Roth conversions and wages, if applicable. Managing income around that $150,000 threshold is central to qualifying for the retirement income exclusion.

If you exclude Social Security and qualify for the retirement income exclusion, many retirees are not facing a significant New Jersey income tax burden.

Working in retirement and tax planning

Robert Powell: Many retirees continue to work part time or full time. Their wages are subject to income tax. What should they keep in mind?

Jeffrey Christakos: Additional wages could push total income above the $150,000 threshold, which could make retirement income taxable.

New Jersey’s income tax rates can go up to over 11%, but for many retirees earning around $200,000 in total income, we often see an effective state income tax rate closer to about 5% in our planning scenarios.

Sales taxes and property taxes

Robert Powell: Let’s talk about the broader tax burden. What about sales taxes and property taxes?

Jeffrey Christakos: There is a sales tax, primarily on nonessential items. Compared with some states, such as Florida, New Jersey’s sales tax structure may be less extensive in certain areas.

Property taxes depend largely on where you live and the value of your home. For example, I live in a town next to another town with significantly higher property taxes. We don’t have our own high school and rely on a neighboring town, and we have a volunteer fire department. As a result, our tax burden is lower.

To give a concrete example, my home is assessed at about $800,000 to $850,000, and my property taxes are approximately $10,500 annually. Nationally, that’s not extraordinarily high.

New Jersey also offers the Stay NJ property tax relief program. If your income is under roughly $500,000, you may qualify for a refund of up to $6,500, or half of your property taxes, whichever is less. In my case, I receive about $5,000 back.

For many retirees, that refund significantly reduces the effective property tax burden.

Estate and inheritance taxes

Robert Powell: What about estate taxes?

Jeffrey Christakos: New Jersey eliminated its estate tax. However, the state still imposes an inheritance tax in certain situations. If assets pass to someone who is not a direct-line heir, there may be a modest inheritance tax.

Eliminating the estate tax was intended to keep New Jersey competitive with other states.

Moving to New Jersey in retirement

Robert Powell: What about retirees considering moving to New Jersey?

Jeffrey Christakos: New Jersey offers proximity to New York City, access to cultural amenities and strong hospital systems. That can be important for retirees.

Housing costs depend on location. If you’re within 20 miles of New York City, prices will be higher. But if you move an hour into the middle of the state, housing prices can be substantially lower — sometimes half the cost — while still benefiting from property tax relief programs.

There are options within the state, depending on your budget and preferences.