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Governor Mikie Sherrill • Lt. Governor Dr. Dale G. Caldwell

Division of Taxation

Income Standards

Beginning with 2024, income is no longer based on PAAD standards. With few exceptions, all income that you received during the year must be taken into account when determining eligibility. This includes:

  • Income reported on Form NJ-1040, or income that would have been reported if filed;
  • Tax-exempt interest;
  • Distributions from - or rollovers to - a Roth IRA;
  • Other retirement income excluded from taxation (e.g., disability pension); and
  • Federal Social Security.

You must allocate jointly owned income sources based on your percentage of ownership.

You cannot apply a loss in one category of income against income or gains in another.

  • Unemployment Benefits
  • Middle-Class Tax Rebates;
  • Paycheck Protection Program (PPP) loan amounts forgiven through the federal CARES Act or federal Paycheck Protection Program;
  • Economic Impact Payments (stimulus payments);
  • Forgiven Paycheck Protection Program (PPP) loans;
  • Benefit amounts received under the New Jersey State Lifeline Credit program/Tenants Lifeline Assistance program;
  • ANCHOR Benefits;
  • Homestead Benefits;
  • Senior Freeze Benefits;
  • Proceeds from spouse's/civil union partner’s life insurance;
  • Capital gains on the sale of a principal residence of up to $250,000 if single, and up to $500,000 if married/civil union couple. Capital gains in excess of the allowable exclusion must be included in income. (Capital gains and the exclusion of all or part of the gain on the sale of a principal residence are calculated in the same manner for both federal and State Income Tax purposes.);
  • Stipends from the Volunteers in Service to America (VISTA), Foster Grandparents and Workforce 55+ programs; and programs under Title V of the Older Americans Act of 1965;
  • Proceeds received by the beneficiary of a Special Needs Trust;
  • Proceeds received from viatical settlements;
  • Agent Orange payments;
  • Reparation payments to Japanese Americans by the federal government pursuant to Sections 105 and 106 of the Civil Liberties Act of 1988, P.L. 100-383 (50 U.S.C. App. 1989b-4 and 1989b-5);
  • Amounts paid as reparations or restitution to Nazi Holocaust victims pursuant to P.L. 1998, c.113;
  • Rewards involving health care fraud or abuse that apply to N.J.A.C. 10:49-13.4;
  • Rollovers from one financial instrument to another (e.g., pension, annuity, insurance contract, but not including IRA's);
  • Tax-free exchanges of a policy or contract handled between two insurance companies;
  • Insurance policyholder's original contributions if demutualization of the policy occurs;
  • Income Tax refunds (New Jersey, federal, and other jurisdictions);
  • Section 8 payments received by homeowners;
  • Reverse mortgage amounts received.

For more information on reporting income, see the PAS-1 instructions.

View the Income Limits History.

The Division provides the following clarification on retirement income reported for the PAS-1 application, specifically regarding Worksheets A, B, C, and D. On line c of the worksheets, taxpayers should report the amount from line 20b of the NJ-1040, but only to the extent it reflects interest or other earnings on pensions, annuities, or IRAs. Taxpayers should exclude any amounts representing the return of previously taxed contributions (basis) to an annuity or to a retirement plan that is not a 401(k). In addition, amounts reported on line 20a of the NJ-1040 should not be included on line c.
Traditional IRA or other qualified plan rollovers that are not taxable to New Jersey will not be included as income on the PAS-1 application. Roth IRA rollovers are specifically included by the Stay NJ law in the income calculation for these programs so they must be included on line c of the worksheet, even if they are not taxable for New Jersey income tax purposes. Taxpayers should not include their previously taxed contributions (basis) as income on the PAS-1 application.

Last Updated: Wednesday, 02/11/26