Will NJ Retirees Continue to Move to PA?

Realtors who sell homes near the Delaware River in Bucks County are accustomed to New Jersey residents seeking to retire and buy homes in Pennsylvania. Historically, their tax burden would be less on this side of the river. This flight to PA may not continue.

In the fall of 2016, Governor Christy signed into law a bill that would significantly reduce the tax burden for New Jersey's retired residents. The state income tax exclusion on sources of retirement income such as pensions, annuities, 401(k) and IRA withdrawals will gradually be increased from $20,000 to $100,000 in 2020 for joint filers. The income tax reduction and the repeal of the NJ estate tax in 2018 make NJ a far more retiree friendly state than it has been in the past.

Property taxes are still higher in NJ than in PA, but that will become a less significant factor now that income and estate taxes have been reduced. While NJ has the highest property taxes in the country, PA has the twelfth highest. Financially, it may no longer make sense for many NJ retirees to move to PA.