It's a beautiful snowy day in the best area of NJ!
Here is a guide to 2023 NJ Tax rates. https://states.aarp.org/new-jersey/state-taxes-guide
The income tax rate is graduated. So you don't pay your marginal rate on all income, like the Fed tax. This makes its difficult to calculate going backwards from your tax on taxable income.
Also, for NJ, your local real estate tax is deductible, as are medical expenses not deductible on the Fed.
What you can do to find your NJ marginal rate is to add $1K income to a previous year completed taxes, and follow down the form to how much that changes your tax owed. Simple division will tell you the marginal bracket you're in.
It makes sense to just use your marginal bracket on the Fed side to make the decision, though, and let chips fall on the NJ side.
I think you have the right approach - chip away at individual stock AND Roth conversions, and make adjustments each year. Try to avoid the next higher bracket.
With looming Fed tax increases in 2026, it makes this a lot of fun to attempt a long-range analysis.
What we've done with inherited and gifted stock is separately manage that in a "legacy" brokerage account. Each year I simplify the holdings a bit, make charitable contributions, and pay those pesky NJ R.E. taxes. In your case, you could select a more-diverse ETF with appropriate focus.
You definitely want to keep an eye on the NJ Retirement Income Exclusions (https://www.nj.gov/treasury/taxation/njit7.shtml) which are nice to have at 62. In 2022, with wife still working and me retired, about $26K was excluded from our NJ 1040. It does get phased out with income limits, though.
Here is a guide to 2023 NJ Tax rates. https://states.aarp.org/new-jersey/state-taxes-guide
The income tax rate is graduated. So you don't pay your marginal rate on all income, like the Fed tax. This makes its difficult to calculate going backwards from your tax on taxable income.
Also, for NJ, your local real estate tax is deductible, as are medical expenses not deductible on the Fed.
What you can do to find your NJ marginal rate is to add $1K income to a previous year completed taxes, and follow down the form to how much that changes your tax owed. Simple division will tell you the marginal bracket you're in.
It makes sense to just use your marginal bracket on the Fed side to make the decision, though, and let chips fall on the NJ side.
I think you have the right approach - chip away at individual stock AND Roth conversions, and make adjustments each year. Try to avoid the next higher bracket.
With looming Fed tax increases in 2026, it makes this a lot of fun to attempt a long-range analysis.
What we've done with inherited and gifted stock is separately manage that in a "legacy" brokerage account. Each year I simplify the holdings a bit, make charitable contributions, and pay those pesky NJ R.E. taxes. In your case, you could select a more-diverse ETF with appropriate focus.
You definitely want to keep an eye on the NJ Retirement Income Exclusions (https://www.nj.gov/treasury/taxation/njit7.shtml) which are nice to have at 62. In 2022, with wife still working and me retired, about $26K was excluded from our NJ 1040. It does get phased out with income limits, though.
Statistics: Posted by Target2019 — Fri Jan 19, 2024 6:59 am — Replies 14 — Views 803