Key Takeaways
New Jersey has both compelling lifestyle reasons yet financial detractors of living in the state.
New Jersey has seen a population decline, especially in the older generations, over the last decade.
The state has at least four generous programs to keep seniors and retirees living in-state.
New Jersey is a wonderful state that has a lot to offer. It’s close to two major metropolitan cities. It has some of the nicest beaches on the East Coast. It boasts scenic rivers, farmland, and hiking trails. It also has a strong educational system that includes top-ranking schools and renowned universities. And of course, the plethora of amazing restaurants offering different cuisines.
Despite all these great benefits, the state has seen a population decline over the past decade, especially among older generations. Once folks are no longer utilizing the Garden State’s excellent school systems and wealth of high-paying prestigious jobs, it gets harder to justify paying the highest property taxes in the nation on top of high-income taxes, housing prices, and overall cost of living. In fact, for the fifth consecutive year, the United Van Lines National Movers Study found that more residents moved out of New Jersey than any other state, as 67% of all New Jersey moves were outbound. Of those 67% of outbound moves, 2/3rds were of residents that were 55 or older.
The challenge of retaining older residents (and their tax dollars) has not been lost on Garden State lawmakers. Because of this, many programs and laws have been passed in the past 5 or so years that make it more beneficial for residents to stay in-state during their golden years.
Here are programs that have been implemented over the past decade to help keep seniors and retirees in-state: 1) Elimination of state estate taxes. The estate tax exclusion was originally $675,000 prior to 2017. From 2017 to 2018 it changed to $2 million. After 2018 it was changed so that no estate tax would be imposed. By comparison 12 states and the District of Columbia impose estate taxes and six impose state inheritance taxes (including New Jersey). Maryland is the only state to impose both a state estate tax rate and a state inheritance tax.
2) Retirement income exclusion. This is an area in which we do a lot of planning for our clients. While New Jersey has never taxed Social Security, a few years back they also added a retirement income exclusion as well. Originally if you were married, 62 or older, and made less than $100,000 in income (excluding Social Security benefits), you owed no state income tax. But one dollar more it all became taxable. To improve this, more recently New Jersey expanded this program for those making $100,001 to $125,000 (excluding Social Security), 50% of your income tax is excluded from state income tax, and for $125,000 to $150,000 (excluding Social Security), 25% of your income is excluded from state income tax. 3) StayNJ property tax rebate program. You may recall from our previous article, by Devin Starr (click here to read more about ANCHOR program updates here), that there where a few updates made to the ANCHOR property tax rebate. Currently, the ANCHOR program is designed to provide tax relief to New Jersey residents based on your residency, age, and income. In addition to the ANCHOR program, Lawmakers recently passed a new law called StayNJ which becomes effective in 2026. New Jersey has some of the highest property taxes in the country. However, if you are 65 or older and your income is less than $500,000, you will be able to qualify for a 50% reduction in your property taxes up to $6,500. For example, if your property taxes are $10,000, you’d get a $5,000 deduction. If your property taxes are $20,000, your deduction maxes out at $6,500, but that's still a substantial tax savings. 4) Enhanced EV credits. Retirees get a $4,000 credit for purchasing an electric vehicle in New Jersey—on top of the $7,500 federal credit. That’s $11,500 total. For instance, the Tesla Model 3 has a base price of $40,000, and you could get it after credits for $28,500. Not bad. Just know that Charge Up NJ (the NJ EV credit program) has $30 million in credit funding available per year which resets every July. Once the funds for that year run out, the credit is no longer available. So, it is a good idea to purchase around the reset time. To track the number of credits available, see ChargeUp New Jersey.
When clients start thinking seriously about retiring, one of the first questions that comes to mind is “where should I live?” Being close to friends, family, and trusted healthcare usually tops the list. If they feel they can continue to afford to live in proximity to that network, they often choose to do so. New Jersey will always have a high cost of living, but incentive programs like those above will go a long way to retaining more of the state’s retirees.
The aforementioned annual National Movers Survey shows that these incentive programs have been helping to staunch the net outflow of retirees from the Garden State. When you can still afford to live in close proximity to family, friends, and healthcare, plus easy access to two major cities, and beautiful beaches - more and more retirees are rethinking a rush to the exit ramp.
Conclusion
If you or someone close to you has concerns about relocating in retirement, please don’t hesitate to reach out. We’ve helped many clients like you in similar situations.
RYAN A. DUNN, CFP®, is a Wealth Manager at Novi Wealth