The Short Answer
Active-duty pay is generally taxable to New Jersey residents, but combat-zone pay and pay while hospitalized from a combat-zone injury are exempt. Your base pay is set by the federal pay table — identical to every other state for your rank and years of service. What actually changes in New Jersey is your BAH (averaging $2,200/mo without dependents and $2,700/mo with dependents) and how New Jersey treats the taxable portion of your pay.
State tax status: ~ PARTIAL EXEMPT
2026 Worked Example — E-5, 6 Years, With Dependents in New Jersey
Here is how the math actually lands for a mid-career enlisted member stationed in New Jersey, built the way I read my own LES. Base pay and BAS are federal; the New Jersey BAH figure is the state average.
| Monthly line item | Amount | Taxable? |
|---|---|---|
| Base pay (E-5, over 6 yrs) | $3,874 | Yes (federal + state) |
| BAH with dependents (New Jersey avg) | $2,700 | No — tax-free |
| BAS (enlisted) | $476.95 | No — tax-free |
| Gross monthly entitlements | $7,050.95 | — |
| Taxable income (base pay only) | $3,874 | — |
| Est. New Jersey state income tax | varies — see notes | — |
Only the $3,874 of base pay is taxable — the $3,176.95 of BAH + BAS is completely tax-free. Run your exact rank, ZIP, and dependency status in the Military Pay Calculator for a precise estimate.
How New Jersey Taxes Each Type of Military Pay
Active-Duty Base Pay
Active-duty pay is generally taxable to New Jersey residents, but combat-zone pay and pay while hospitalized from a combat-zone injury are exempt.
Guard & Reserve Drill Pay
New Jersey Guard and Reserve drill pay is generally taxable as ordinary income.
Military Retirement Pay
Military retirement pay is fully exempt from New Jersey income tax.
VA Disability Compensation
VA disability compensation is exempt federally and is not taxed by New Jersey.
SCRA & Residency in New Jersey
A nonresident servicemember at Joint Base MDL who is a legal resident of another state owes no New Jersey tax on military pay under SCRA.
This is the single most misunderstood rule in military pay. Your home of record / state of legal residence — not your duty station — generally determines who can tax your military pay. Changing it is a deliberate act, not something that happens automatically when you PCS.
Major Military Installations in New Jersey
- Joint Base McGuire-Dix-Lakehurst
- Naval Weapons Station Earle
- Picatinny Arsenal
BAH is set by the Military Housing Area covering your duty ZIP. Verify your exact rate at the official DoD BAH lookup.
Official Sources
FAQ — Military Pay in New Jersey
Does New Jersey tax my military base pay?
Active-duty pay is generally taxable to New Jersey residents, but combat-zone pay and pay while hospitalized from a combat-zone injury are exempt.
Is my BAH taxed in New Jersey?
No. BAH is federally tax-free and is never counted as income for New Jersey state income tax, regardless of how New Jersey treats base pay.
Does New Jersey tax military retirement pay?
Military retirement pay is fully exempt from New Jersey income tax.
I'm stationed in New Jersey but my home of record is elsewhere — who taxes me?
A nonresident servicemember at Joint Base MDL who is a legal resident of another state owes no New Jersey tax on military pay under SCRA.