The Foreign Service Journal, January-February 2016

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2016 87 AFSA NEWS NORTH CAROL I NA Pursuant to the “Bailey” deci- sion (see www.dornc.com/ taxes/individual/benefits. html), government retirement benefits received by federal retirees who had five years of creditable service in a federal retirement system on Aug. 12, 1989, are exempt fromNorth Carolina income tax. Those who do not have five years of creditable service on Aug. 12, 1989, must pay North Carolina tax on their federal annuities. As of 2014, the $4,000 deduc- tion is no longer available. For those over age 65, an extra $750 (single) or $1,200 (couple) may be deducted. Social Security is exempt. State sales tax is 4.75 percent; local taxes may increase this by up to 3 percent. NORTH DAKOTA All pensions and annuities are fully taxed. Social Security is exempt. General sales tax is 5 percent, 7 percent on liquor. Local jurisdictions impose up to 3 percent more. OH I O Retirement income is taxed. Taxpayers 65 and over may take a $50 credit per return. In addition, Ohio gives a tax credit based on the amount of the retirement income included in Ohio adjusted gross income, reaching a maximum of $200 for any retirement income over $8,000. Social Security is exempt. State sales tax is 5.75 percent. Counties and regional transit authorities may add to this, but the total must not exceed 8.75 percent. of the tax liability or 9 percent of taxable pension income. Oregon does not tax Social Security benefits. Oregon has no sales tax. PENNSYLVAN I A Government pensions and Social Security are not subject to personal income tax. Penn- sylvania sales tax is 6 percent. Other taxing entities may add up to 2 percent. PUERTO R I CO The first $11,000 of income received from a federal pension can be excluded for individuals under 60. For those over 60, the exclusion is $15,000. If the individual OKLAHOMA Individuals receiving Fed- eral Employees’ Retirement System, Foreign Service Pension System or private pensions may exempt up to $10,000, but not to exceed the amount included in the federal adjusted gross income. Since 2011, 100 percent of a federal pension paid in lieu of Social Security (i.e., Civil Service Retirement System and For- eign Service Retirement and Disability System—“old sys- tem”—including the CSRS/ FSRDS portion of an annuity paid under both systems) is exempt. Social Security included in federal adjusted gross income is exempt. State sales tax is 4.5 percent. Local and other additions may bring the total up to 9.5 percent. OREGON Generally, all retirement income is subject to Oregon tax when received by an Oregon resident. However, federal retirees who retired on or before Oct. 1, 1991, may exempt their entire federal pension; those who worked both before and after Oct. 1, 1991, must prorate their exemption using the instruc- tions in the tax booklet. If you are over age 62, a tax credit of up to 9 percent of taxable pension income is available to recipients of pension income, including most private pen- sion income, whose house- hold income was less than $22,500 (single) and $45,000 (joint),and who received less than $7,500 (single)/$15,000 (joint) in Social Security ben- efits. The credit is the lesser receives more than one federal pension, the exclusion applies to each pension or annuity separately. Social Security is not taxed. RHODE I S LAND U.S. government pensions and annuities are fully taxable. Sales tax is 7 percent; meals and beverages are taxed at 8 percent. SOUTH CAROL I NA Individuals under age 65 can claim a $3,000 deduction on qualified retirement income; those 65 years of age or over can claim a $10,000 deduc- tion on qualified retirement income. A resident of South