The Foreign Service Journal, January-February 2016

84 JANUARY-FEBRUARY 2016 | THE FOREIGN SERVICE JOURNAL ALABAMA Social Security and U.S. government pensions are not taxable. The combined state, county and city general sales and use tax rates range from 7 percent to as much as 10 per- cent. See also www.revenue. alabama.gov/taxpayerassist/ retire.pdf. ALASKA No personal income tax. Most municipalities levy sales and/ or use taxes of between 2 and 7 percent and/or a property tax. If over age 65, you may be able to claim an exemption. AR I ZONA Up to $2,500 of U.S. govern- ment pension income may be excluded for each taxpayer. There is also a $2,100 exemp- tion for each taxpayer age 65 or over. Arizona does not tax Social Security. Arizona state sales and use tax is 5.6 per- cent, with additions depending on the county and/or city. ARKANSAS The first $6,000 of income from any retirement plan or individual retirement account is exempt (to a maximum of $6,000 overall). Social Security is not taxed. There is no estate or inheritance tax. State sales and use tax is 6.5 percent; city and county taxes may add another 5.5 percent. D I STR I CT OF COLUMB I A Pension or annuity exclusion of $3,000 is applicable if 62 years or older. Taxable income excludes Social Security. Sales and use tax is 5.75 percent, with higher rates for some commodities (liquor, meals, etc.). F LOR I DA There is no personal income, inheritance, gift tax or tax on intangible property. The state sales and use tax is 6 percent. There are additional county sales taxes which could make the combined rate as high as 9.5 percent. GEORG I A Individuals who are 62 years or older or totally disabled may exclude up to $35,000 of retirement income. Up to $65,000 of retirement income is excludable for taxpayers age 65 or older. Taxable income excludes Social Security. Sales tax is 4 percent statewide, with additions of up to 3 percent depending on jurisdiction. HAWA I I Pension and annuity distri- butions from a government pension plan are not taxed in Hawaii. Social Security is not taxed. Hawaii charges a general excise tax of 4 percent instead of sales tax. CAL I FORN I A Pensions and annuities are fully taxable. Social Security is not taxed. The sales and use tax rate varies from 7.5 percent (the statewide rate) to 11 percent in some areas. COLORADO Up to $24,000 of pension or social security income can be excluded if individual is age 65 or over. Up to $20,000 is exempt if age 55 to 64. State sales tax is 2.9 percent; local additions can increase it to as much as 9.9 percent. CONNECT I CUT Pensions and annuities are fully taxable for residents. Social Security is exempt if federal adjusted gross income is less than $50,000 for singles or $60,000 for joint fil- ers. Statewide sales tax is 6.35 percent. No local additions. DELAWARE Pension exclusions per per- son: $2,000 is exempt under age 60; $12,500 if age 60 or over. There is an additional standard deduction of $2,500 if age 65 or over if you do not itemize. Social Security income is excluded from tax- able income. Delaware does not impose a sales tax. I DAHO In 2015, Civil Service Retire- ment System and Foreign Ser- vice Retirement and Disability System pensions qualify for a deduction of up to $31,956 for a single return and up to $47,934 for a joint return if the individual is age 65 or older, or age 62 and disabled. Fed- eral Employees’ Retirement System or Foreign Service Pension System pensions do not qualify for this deduction. The deduction is reduced dol- lar for dollar by Social Security benefits. Social Security itself is not taxed. Idaho state sales tax is 6 percent; some local jurisdictions add as much as another 3 percent. I L L I NO I S Illinois does not tax U.S. gov- ernment pensions or Social Security. State sales tax is 6.25 percent. Local additions can raise sales tax to 10.5 per- cent in some jurisdictions. I ND I ANA If the individual is over age 62, the adjusted gross income may be reduced by the first $2,000 of any pension, reduced dollar for dollar by Social Security benefits. There Is also a $1,000 exemption if over age 65, or $1,500 if fed- eral adjusted gross income is less than $40,000. There is no pension exclusion for survivor STATE PENSIONAND ANNUITYTAX The laws regarding the taxation of Foreign Service annuities vary greatly from state to state. In addition to those states that have no income tax or no tax on personal income, there are several states that do not tax income derived from pensions and annuities. Idaho taxes Foreign Service annuities while exempting certain categories of Civil Service employees. Several websites provide more information on individual state taxes for retirees, but the Retirement Living Information Center at www.retirementliving.com/taxes- by-state is one of the more comprehensive and is recommended for further information.